This type of liability occurs when there is physical injury or death to a third party and the policyholder is held legally liable. This coverage is commonly referred to as "BI" and is usually combined with Property Damage Liability.
Liability is a term that broadly means legal responsibility.
Liability coverage protects your financial obligation if you're held responsible for injuries or damages arising from a car accident.
Property Damage Liability Coverage
Property damage liability coverage protects you if you are held responsible for damaging someone else's property in a car accident. Property damage coverage helps you reimburse another person for their damaged property (such as a car, a fence, or a home). This type of auto insurance coverage also helps pay your expenses in a related lawsuit. The amount covered by property damage liability is capped at the limit you choose when you buy your auto insurance policy