What is a defining characteristic of inverse-liability coverage?

Inverse-liability coverage is characterized by being part of the compulsory coverages required by law in many jurisdictions. This type of coverage protects drivers against claims made by other parties when they are at fault in an accident. It is designed to ensure that injured parties receive compensation regardless of the insured's ability to pay, which is a fundamental aspect of liability insurance.

Compulsory coverages are mandated by law in order to ensure that all drivers have a baseline level of financial responsibility and compensation available to those they may injure in accidents. As a result, this coverage is generally not optional, and drivers must have it to legally operate a vehicle.

Understanding this compulsory nature of inverse-liability coverage highlights its importance in promoting road safety and assurance for all parties involved in vehicle incidents. The other aspects, such as covering theft or underinsured drivers, do not accurately describe what inverse-liability coverage specifically provides nor its essential role within insurance regulations.