Why is it essential to have third-party liability insurance as a driver?

Having third-party liability insurance is crucial for drivers because it provides financial protection in the event that you are held responsible for causing an accident that results in injury or damage to other people or their property. This type of insurance ensures that if you are found at fault in an accident, your insurance will cover the costs associated with the other party's claims, which can include medical expenses and repair costs.

Without third-party liability insurance, you would be personally responsible for these costs, which can be substantial and potentially lead to long-term financial hardship. This coverage is not about protecting your own vehicle or belongings; rather, it is a legal requirement in many regions to ensure that all drivers can fulfill their financial obligations to others in the event of an accident.

In contrast, the other choices reflect misunderstandings about the purpose and function of this type of insurance. It is not optional for drivers in many places, it does not cover damages to your own vehicle, and it is not limited to protecting passengers in your vehicle alone.