What is the primary purpose of Liability Coverage in auto insurance?

Liability Coverage in auto insurance is designed specifically to protect the policyholder from financial loss that arises when they are responsible for causing bodily injury or property damage to another party. This type of coverage ensures that if an accident occurs for which the policyholder is at fault, the insurance company will cover the costs associated with claims filed by the injured parties or those whose property has been damaged. This could include medical bills for injuries sustained by others or repair costs for damages caused to someone else's vehicle or property.

It is important to understand that Liability Coverage does not address the policyholder's own vehicle damages, medical expenses incurred by the policyholder or their passengers, or losses related to vehicle theft. Each of those situations would fall under different types of coverage, such as collision coverage for vehicle damage, personal injury protection for medical expenses, or comprehensive coverage for theft. Thus, the primary purpose of Liability Coverage is indeed to protect the policyholder from the financial consequences of their actions that result in harm to others.