Which characteristic does not typically apply to most liability policies?

The selected answer highlights a characteristic that does not typically apply to most liability policies. While liability policies do cover various types of damages, they predominantly focus on compensatory damages, which are designed to reimburse the injured party for actual losses incurred. These can include medical expenses, lost wages, and property damage, but they generally do not extend to exemplary or punitive damages, which are awarded with the intent of punishing the offender rather than compensating the victim.

Typically, liability insurance is designed to protect policyholders against claims made by third parties for harm or damage caused, and the coverage is geared towards compensatory awards. Importantly, punitive damages are not commonly included in standard liability policies as they can significantly increase the financial exposure of the insurer, contradicting the fundamental purpose of liability coverage, which is to mitigate risk and compensate for actual losses, rather than to punish wrongdoers.

In summary, the distinction between compensatory damages, which are the focus of most liability policies, and punitive damages, which are less frequently covered, establishes why this characteristic does not generally apply to liability insurance.