Texas Property and Casualty License Practice Exam 2025 - Free Practice Questions and Study Guide

Auto liability insurance is designed primarily to cover property damage and bodily injury that the insured driver may cause to other people in the event of an accident. This type of coverage is essential because it protects the insured from financial loss arising from claims made by third parties for damages related to an accident for which the insured is found to be at fault.

In most auto liability insurance policies, there are two primary components: bodily injury liability, which pays for the medical expenses and lost wages of others injured in an accident, and property damage liability, which covers repairs to other people's property, such as vehicles or structures, that are damaged because of the accident.

Understanding the importance of this coverage is crucial for drivers, as it is often a legal requirement to have a minimum amount of liability insurance to operate a vehicle. This requirement helps ensure that victims of accidents have a means of receiving compensation for their injuries and damages, promoting a safer driving environment and financial responsibility among drivers.