What is the primary purpose of liability coverage in an auto policy?

Liability coverage in an auto policy is essential for protecting the policyholder from claims arising from accidents where they are at fault. This coverage specifically addresses the costs associated with bodily injury and property damage to others when the insured is responsible for an accident.

When an insured driver causes an accident, liability coverage ensures that any medical expenses incurred by the other party, as well as damages to their property, are covered up to the policy limits. This serves the dual purpose of satisfying legal obligations and providing financial security for the insured. Without adequate liability coverage, the insured could face substantial out-of-pocket expenses and legal actions, which can lead to serious financial repercussions. Thus, the primary purpose of liability coverage is to offer protection against these types of claims from third parties.