If Joe has $20,000 in liability and $15,000 in medical bills from an accident, what would his liability insurance cover?

In this scenario, understanding the limits of liability insurance is crucial. Liability insurance primarily covers damages that the insured is legally responsible for causing to another party, which can include property damage and bodily injury to others.

Joe has a liability limit of $20,000. If he is liable for an accident resulting in $15,000 in medical bills, this amount would typically fall under the bodily injury coverage if it’s directed towards the medical expenses of the injured party. However, liability insurance does not generally cover the injured party's medical expenses directly but relates to the claims made against Joe for damages he caused.

In the context of Joe’s liability limit, if the total amount of damages exceeds his liability coverage, he can be held personally responsible for any amount that goes beyond the coverage limit. In this case, since the total liability insurance limit of $20,000 can cover the medical bills of $15,000, it would still cover those bills. Therefore, the correct interpretation does not indicate that he receives no coverage at all, because he is within the limit for medical bills.

The correct answer implies that Joe’s liability insurance would cover the claims up to the limit but doesn’t mention that he is entirely out of coverage since the expenses are within limits.