'Liability' insurance is a policy designed to protect you if you're sued. The owners of property or businesses generally carry liability insurance to protect themselves from lawsuits brought by persons injured on their property. Homeowner insurance policies usually include liability coverage of up to $100,000 (one hundred thousand dollars), although some homeowners choose to carry increased coverage, in some cases three to five times greater. For the owners of businesses in which the public is invited onto the premises, it's important to carry liability insurance. Injuries resulting from a simple slip and fall accident can result in significant damages. The terms of your liability coverage depend on your particular policy, but generally, your insurance covers the attorney's fees, actual damages, and compensation awarded for pain and suffering to the victim of an accident for which you're liable. Liability insurance is an important part of your auto insurance, and if you're found to be at fault in an accident, your insurance company pays the injured party's actual damages and compensation for pain and suffering. This situation does not usually apply in states with no-fault auto insurance legislation. In a no-fault situation, each party's insurance generally covers his or her own actual damages, regardless of liability or fault.