What type of loss does personal liability coverage protect against in a Homeowners Policy?

Personal liability coverage in a Homeowners Policy primarily protects against legal liabilities that arise from bodily injury or property damage sustained by others. This type of coverage is essential for homeowners, as it helps ensure that they are financially protected if they are found legally responsible for causing harm or damage to someone else or their property.

In practical terms, this means that if a guest is injured on the homeowner's property — for example, due to a slip and fall — or if the homeowner accidentally damages a neighbor's property, the personal liability coverage would help cover legal costs, settlements, or judgments that may arise from such incidents. This protection is crucial in safeguarding the financial wellbeing of the homeowner against unexpected legal claims and expenses.

Other options describe different types of coverage: theft refers to personal property protection, damage to personal property relates to coverage for the homeowner's own belongings, and loss of income due to property damage concerns business-related interruption rather than personal liability. Thus, the focus of personal liability coverage is specifically on the legal obligations tied to actions impacting others, solidifying option B as the correct answer.