Which statement best differentiates Property Insurance from Liability Insurance?

• A. Property Insurance pays liabilities; Liability Insurance pays property losses
• B. Property Insurance pays the insured for property losses; Liability Insurance pays on behalf of the insured to others for their losses due to the insured's negligence
• C. Property Insurance is only for auto; Liability Insurance is for homes
• D. Property Insurance covers medical expenses only

Answer: (B)

Property insurance protects your own property from damage or loss and pays you to repair or replace what you own. Liability insurance, by contrast, covers your legal responsibility to others for harm you cause, paying third parties for their injuries or property damage and often covering your legal defense. So the essential difference is who is being compensated: property coverage reimburses the insured for their own property losses, while liability coverage compensates others for losses caused by the insured’s negligence.