Property and Casualty Insurance Practice Exam

Which of the following is a feature of Part A - Liability Coverage?

1. Covers damages for third parties only

2. Pays for both property and medical expenses

3. Includes loss of use claims

4. Provides coverage for personal injury claims

The correct answer is: Covers damages for third parties only

Part A - Liability Coverage is primarily designed to protect the insured from financial losses resulting from legal liabilities arising out of bodily injury or property damage sustained by third parties due to the insured's actions. This feature is crucial as it focuses on covering damages only for third parties, meaning that it does not cover expenses or damages incurred by the insured or their property. For instance, if a driver causes an accident that injures another person or damages someone else's property, Part A would cover the claims made by that injured party or property owner. This includes legal defense costs if the insured is sued. In contrast, coverage for personal injury claims, loss of use claims, or payments for the insured’s own property and medical expenses does not fall under this specific part of the coverage, as they pertain to different areas of insurance liability. Therefore, the emphasis of Part A as a liability coverage strictly being for third-party claims underscores the importance of ensuring that individuals and businesses are financially protected against unforeseen legal liabilities resulting from their actions.