Texas Property and Casualty License Practice Exam 2025 – All-in-One Guide to Exam Success!

Liability insurance is specifically designed to protect individuals and businesses from claims that arise due to injuries or damage caused to other people or their property. This type of insurance covers the legal costs and any settlements that may be awarded in case the insured party is found legally responsible for such incidents.

For instance, if someone is injured on your property or if you accidentally cause damage to someone else’s car, liability insurance can help cover the medical expenses or repair costs that you may be held liable for. This coverage is essential because it provides financial protection against lawsuits and legal claims that could otherwise lead to significant out-of-pocket expenses.

While the other options mention important aspects of insurance coverage, they do not align with the primary purpose of liability insurance. Loss of personal property, environmental damage coverage, and loss of business income are typically addressed through other types of insurance policies, such as homeowners insurance or business income insurance, rather than liability coverage.