What does liability coverage protect an insured from?

Liability coverage is designed to protect an insured from their legal responsibility for injuries or damages they may cause to other people or their property. This type of coverage comes into play when the insured is found to be at fault, often as a result of actions that lead to bodily injury or property damage to others. It serves to cover the costs associated with legal claims, settlements, or judgments against the insured, thereby providing financial protection in case of lawsuits and ensuring that the insured is not left to bear these costs alone.

In contrast, the other options relate to different aspects of insurance but do not fall under the definition of liability coverage. Loss of property value pertains more to property coverage and the depreciation of items rather than legal liability. Future insurance premium increases are not a risk covered by liability policies but rather potential consequences of filing claims. Lastly, while credit damage might occur as a result of a claim or financial obligations, it is not a direct result of liability coverage and is instead related to credit management and financial responsibility. Therefore, the correct understanding of liability coverage specifically focuses on legal responsibilities toward others.