North Carolina Adjuster Practice Exam

What type of coverage would typically provide financial protection for a driver who damages a vehicle belonging to someone else?

1. Comprehensive coverage

2. Bodily injury coverage

3. Liability coverage

4. Collision coverage

The correct answer is: Liability coverage

Liability coverage is designed to offer financial protection for a driver who causes damage to someone else's vehicle or property. When a driver is at fault in an accident that results in damage to another person's vehicle, liability coverage will pay for the repair or replacement costs associated with that damage. This type of insurance is crucial, as it helps ensure that the responsible party can cover the costs rather than putting their financial burden solely on the victim of the accident. This protection typically includes two components: property damage liability, which specifically addresses damages to another person's property—including their vehicle—and bodily injury liability, which covers expenses related to injuries sustained by others in the accident. However, for the context of the question, the focus is primarily on damage to vehicles, making liability coverage the pertinent choice. Comprehensive coverage, on the other hand, provides protection against non-collision-related incidents such as theft, vandalism, or natural disasters, rather than damage caused to another vehicle in an accident. Collision coverage is intended to pay for repairs to your own vehicle after a collision, regardless of fault, which does not address the financial responsibility towards someone else's vehicle. Bodily injury coverage pertains to medical costs associated with injuries of other individuals but does not relate specifically to property or vehicle damage.