Idaho Property and Casualty Practice Exam 2026 - Free Practice Questions and Study Guide

Liability insurance is specifically designed to provide coverage for damages or injuries that occur as a result of negligence. This form of insurance protects individuals and businesses from the financial repercussions of being found legally responsible for causing harm to another person or their property. For example, if someone is injured on your property or as a result of your actions, liability insurance would cover the legal costs and any damages awarded to the injured party.

Homeowners and auto insurance policies may include liability coverage as part of their comprehensive offerings, but they also have other primary purposes, such as protecting property and vehicles. Health insurance, on the other hand, focuses on covering medical expenses and is not related to negligence. Therefore, liability insurance stands out as the specific type that directly addresses damages caused by negligence, making it the focus of the question.