Generally speaking liability insurance provides coverage for monetary damages that are owed to a third party as a result of the insured being negligent and causing bodily injury or property damage to the third party. It is often called thrid party coverage. There are two parties to the insurance contract, you the insured are the first party and the insurance company is the second party. The third party is everyone else.

A typical general liability policy will be written on an occurrence form and provide coverage for general liability, products and completed operations, personal and advertising injury, fire legal liability and medical expense. The typical policy will have a duty to defend clause which means that the insurance company has a duty to provide a defense of the charges against you. The insurance company will pay the cost of defense and also pay damages up to the limits of your policy. There may or may not be a duductible. The policy is modified by endorsements which can add or exclude coverage.

In the world of commercial insurance there are many variations of policy forms and endorsements that make up any given policy therefore it is impossible to understand exactly what coverages any one policy will provide without reading the policy.