What is liability coverage in a property insurance policy?

Liability coverage in a property insurance policy serves as protection for the policyholder against claims resulting from injuries or damage they may cause to other individuals or their property. This type of coverage is essential because it addresses legal responsibilities that arise when the insured is held liable for damages.

For instance, if a guest is injured on the insured’s property, liability coverage would help cover legal costs or settlements required as a result of that injury claim. Similarly, if the insured accidentally damages someone else’s property, this coverage would assist in compensating the affected party for their loss.

The other options relate to different aspects of property insurance: protecting the insured property, compensating for lost rental income, and covering damages from natural disasters are different types of coverage that serve other purposes. However, they do not encompass liability coverage, which focuses specifically on protecting the insured from claims made by third parties due to their actions or negligence.