# Liability Coverage

*Insurance — Finicade finance glossary*

Liability coverage pays what you become legally responsible for when you injure someone or damage their property, including the legal defence. It's the part of insurance that protects assets rather than possessions, and therefore the part that should scale with your net worth rather than with the value of your car. Judgments above your limit are collected from savings, home equity and future wages.

**Also known as:** third party liability, bodily injury liability

**Related terms:** [Umbrella Policy](https://finicade.com/glossary/umbrella-policy), [Auto Insurance](https://finicade.com/glossary/auto-insurance), [Policy Limit](https://finicade.com/glossary/policy-limit), [Homeowners Insurance](https://finicade.com/glossary/homeowners-insurance), [Indemnity](https://finicade.com/glossary/indemnity)

Source: https://finicade.com/glossary/liability-coverage