Liability

What is liability in the insurance context? I found this definition in WiseGeek, obtained through Google search.

In legal terms, the word liability refers to fault. The person who is at fault is liable to another because of his or her actions or failure to act.

One example is in the case of a crime. The liability of the offending party may include providing restitution for damage to property or paying medical bills in the case of physical injury.

Another example of liability in the legal realm is an automobile accident. The person who caused the accident, through action or omission, is liable to the injured party.

Liability insurance exists for just such a purpose. It covers the expenses of the injured party, including damage to the vehicle or other property as well as a certain amount of medical expenses, and may reimburse the injured party for attorney's fees if civil action is required.