What type of insurance covers third parties for damage caused by the negligence of the insured?

• A. Comprehensive coverage
• B. Full coverage
• C. Collision coverage
• D. Liability coverage

Answer: (D)

Liability coverage. This type of auto insurance is meant to pay for injuries or property damage that you cause to other people if you’re at fault due to negligence. It protects third parties, not your own car or injuries. In other words, it covers the damage you inflict on others, such as medical bills or repairing someone else’s car, whenever you’re responsible for the accident.

Comprehensive coverage handles non-collision damage to your own vehicle (theft, weather, vandalism), collision coverage pays for damage to your own car in a crash, and “full coverage” is a nonstandard term that usually means having liability plus collision and comprehensive.