In a personal auto policy (PAP), what does the liability coverage usually cover?

Liability coverage in a personal auto policy (PAP) is designed to protect the policyholder against claims resulting from injuries and damages caused by the insured driver in an accident. This coverage typically includes bodily injury liability, which pays for the medical expenses, lost wages, and pain and suffering of the other party involved in the accident, as well as property damage liability, which covers the costs of repairing or replacing the other party's vehicle or property that was damaged due to the policyholder's fault.

This distinction is crucial because liability coverage does not extend to personal injuries or damages incurred by the policyholder or their own vehicle. Rather, it is specifically intended to cover the financial responsibility one may have towards other individuals affected by an accident that they caused. Understanding this aspect of liability coverage is essential for anyone seeking to be properly insured while operating a vehicle, as it emphasizes the importance of being financially prepared for potential accidents involving others.