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In this video, financial expert George Campbell explains three key aspects of liability insurance: its definition, coverage, and limits. Liability insurance is deemed the most crucial type of car insurance. Campbell illustrates its importance through a scenario where a driver, distracted by ice cream choices, swerves to avoid a chipmunk and crashes into another car. Despite the chipmunk's role in the incident, the driver is held responsible for the damages, highlighting why liability insurance is essential for covering such costs.