If you cause an accident or cause injury to another person or their property with your vehicle, your liability insurance will help to cover your legal obligation, up to the limits of your policy.
There are two types of legal obligation:
Bodily injury liability: If you cause an accident that harms another person, your liability coverage will pay for “pain and suffering” claims, medical expenses including hospitalization and surgery, and even lost wages for the injured parties, up to your policy limits. Bodily injury liability typically has two limits: one for each person injured, and one for the total injury costs of the accident.
Property damage liability: If you cause an accident that damages or destroys another person’s car or truck, your liability insurance will pay for the repairs to the other driver’s vehicle, up to your property damage limit. Likewise, if you run into a building or drive into a hedge, your property damage liability coverage will cover the costs of replacing or repairing the damaged items.
Liability insurance also helps to cover the costs of lawsuits arising from an accident. If an injured driver or passenger files a lawsuit against you, your liability insurance will help to pay for your legal defense. Note that you will probably need legal defense in court, whether or not you are found at fault for the damage.