Which of the following best describes liability coverage?

Liability coverage is a crucial aspect of insurance, designed primarily to protect individuals and businesses from the financial repercussions that arise when they are deemed legally responsible for causing harm to others. Specifically, it addresses costs associated with claims made against the policyholder for negligent acts, which can include bodily injury or property damage inflicted on another party due to the policyholder's actions or inactions.

Understanding this coverage is fundamental because it emphasizes the distinction between negligence and intentional actions. Negligence refers to the failure to exercise reasonable care, leading to unintended harm, whereas intentional acts are typically not covered under standard liability policies. Therefore, the focus of liability coverage on negligent acts positions it as a protective measure for uninsured damages that arise in everyday circumstances, which is essential for individuals and businesses alike.

The other choices, while related to various aspects of insurance or liability, do not accurately encapsulate the primary function of liability coverage. For instance, protecting against the loss of personal property, covering only intentional acts, or providing protection for business asset losses does not reflect the characteristic purpose of liability coverage within a standard insurance framework. This makes the selection that highlights the coverage for claim costs due to negligent acts the most fitting description of what liability coverage entails.