A more thorough explanation:

Liability insurance coverage is a type of insurance policy that protects the insured person or business from financial losses resulting from their negligence or wrongdoing that causes harm to another person or their property. This type of insurance policy is also known as third-party liability insurance because it covers the insured person's liability to a third party.

For example, if you have liability insurance for your car and you get into an accident that injures someone, your liability insurance will cover the cost of the injured person's medical bills and other damages. Similarly, if you own a business and a customer slips and falls on your property, your liability insurance will cover the cost of the customer's medical bills and any other damages they may have suffered.

Liability insurance coverage is based on the concepts of fault, proximate cause, and duty. This means that the insured person or business is covered for their own negligence or wrongdoing that causes harm to another person or their property. The insurance policy will only cover damages that are directly related to the insured person's actions and that were reasonably foreseeable.