Which of the following best defines "liability coverage"?

Liability coverage is best defined as insurance that protects the policyholder against claims resulting from injuries and damages they cause to other people or their property. This type of coverage is essential in automobile insurance as it ensures that if the policyholder is found legally responsible for an accident, the insurance will help cover the costs associated with those damages, such as medical expenses and property repairs.

This definition encapsulates the purpose of liability coverage, which is to provide financial protection to the policyholder when they are responsible for an accident. The coverage typically includes bodily injury liability, which pays for injuries sustained by others, and property damage liability, which covers damage to someone else's property.

Other options fall short of defining liability coverage comprehensively. For instance, one option refers only to theft, which does not align with the broader responsibilities encompassed in liability coverage. Another option restricts coverage to personal injuries, neglecting property damage aspects, which are also integral to liability policies. Lastly, coverage that is limited to property damage alone ignores the bodily injury component essential to liability coverage. Thus, the comprehensive nature of liability coverage is effectively captured by its focus on damages caused by the policyholder to others.