Bodily Injury Liability. Bodily injury occurs when a person suffers an injury to his or her body, including a sickness or disease resulting from an injury. Bodily injury liability may exist when a person or entity is financially responsible for another person's bodily injury. Liability for bodily injury can occur as a result of state or federal statute, common law, or by contract in the form of a liability insurance policy. For instance, it is typical for both homeowner's insurance policies and automobile insurance policies to contain bodily injury provisions, often relating to liability limits and exclusions of liability in certain situations. Bodily injury liability can be distinguished from property damage liability, as well as other types of potential liability.