Definition

Insurance that protects you if you’re legally responsible for someone else’s injury or property damage. It can help cover legal fees and settlements.

What to consider

  • Ensure you have enough coverage to protect your personal assets.
  • Review the policy details to understand your limits.
  • Consider additional coverage if you have significant exposure.

Real world scenarios

  • Hosting a large event, Molly confirms her homeowners policy offers liability coverage if guests are injured on her property.
  • A collision with another car means Sam’s auto liability insurance helps pay for the other driver’s damages.
  • Kim updates her coverage limits after buying a trampoline, minimizing the risk of personal financial damage if accidents happen.

Related terms

Legal & Estate Planning