Rhode Island Insurance Adjuster Exam

What does liability insurance cover?

1. Only health-related expenses

2. Damages caused by the insured to others

3. Only property damage claims

4. Only personal injury claims

The correct answer is: Damages caused by the insured to others

Liability insurance is designed to protect the insured from claims made against them for damages they may have caused to other people or their property. This type of insurance typically covers legal fees, settlements, and medical expenses that arise when the insured is found responsible for harming another person or their belongings. The scope of liability insurance is broad, encompassing various situations including bodily injury and property damage, thus ensuring that the insured is safeguarded against the financial repercussions of their actions. This makes it an essential component of many insurance policies, as it provides peace of mind not only for individuals but also for businesses that can be held liable for customer injuries or property damage. In contrast, the other options focus narrowly on specific types of coverage. For example, health-related expenses are typically covered under health insurance, while property damage claims and personal injury claims are not comprehensive reflections of liability insurance’s overall purpose. Liability insurance is fundamentally about addressing the financial responsibility for damages incurred to others, which is why the correct understanding of its function aligns with the answer provided.