What is liability coverage?

Liability coverage pays for injuries or property damage you cause to other people. On an auto policy it covers the other driver’s medical bills and vehicle repairs when you are at fault. On a homeowners policy it covers injuries to guests and damage you accidentally cause to others’ property. It does not cover damage to your own vehicle or home — that is handled by separate coverages. Liability is the most important coverage on most policies because it protects your personal assets from lawsuits.