What type of insurance covers liability to third parties for bodily injury/property damage caused by vehicle accidents?

Auto liability insurance is designed specifically to cover damages and injuries that arise from vehicle-related accidents. This type of insurance is crucial for businesses that use vehicles in their operations, as it provides financial protection against claims from third parties for bodily injury and property damage resulting from these accidents.

For example, if an employee driving a company vehicle causes an accident that injures another person or damages another person’s property, auto liability insurance would cover the legal costs and compensation that may arise from such a claim. This ensures that the business is protected from significant financial loss due to accidents involving its vehicles.

In contrast, worker's compensation covers medical expenses and lost wages for employees who get injured on the job, not third-party claims. Commercial general liability provides coverage for a broader range of liabilities but does not specifically target auto-related incidents. A performance bond is a surety bond that guarantees the completion of a project according to the contractual agreement but does not address liability for vehicular accidents. Therefore, the specificity of auto liability insurance makes it the appropriate choice for covering third-party bodily injury and property damage related to vehicle accidents.