Which of the following describes a liability policy provision?

The correct choice highlights how a liability policy provision is structured to specify the circumstances under which coverage applies, including the types of activities that are covered and the limits on the amounts that can be recovered. Liability insurance is inherently designed to protect the insured against claims resulting from injuries and damage to other parties for which the insured could be held legally responsible. This means the policy will outline covered activities—such as operating a business or conducting specified operations—and will detail the limits of coverage in terms of the amount that can be claimed in the event of a legal suit.

Understanding the language of liability policies is crucial. Policies typically state what injuries or damages are covered and delineate any exclusions or limits, clarifying the scope of protection. This ensures that both the insurer and the insured have a clear understanding of the coverage parameters.

The other options do not accurately describe the fundamental nature of a liability policy provision. For instance, the first option inaccurately suggests that the policy would pay for claims that are unverified, which contradicts core principles of liability insurance that require verifiable claims. The second option incorrectly implies that all injuries and damages are automatically covered without exclusions, which is misleading, as liability policies usually include specific exclusions. Finally, stating that the policy applies only to named