Liability insurance is a part of the general insurance system of risk financing to protect the purchaser (the “insured”) from the risks of liabilities imposed by lawsuits and similar claims. It protects the insured in the event he or she is sued for claims that come within the coverage of the insurance policy. Commercial auto insurance is liability coverage, which most states require.
It covers a driver liable for damaging cars or injuring others. In other words it helps cover the financial responsibility if you or an employee is at fault in an accident and people are injured or their property is damaged.
A minimum amount of commercial auto liability insurance (or proof of financial responsibility) is required in most states. Some states also require underinsured motorist and uninsured motorist coverage to protect you when the at-fault driver is unable to pay the total cost.