Which of the following is NOT a characteristic of most liability policies?

The characteristic that most liability policies typically do not include is related to the coverage of exemplary damages. Most liability insurance policies focus on compensatory damages, which are intended to reimburse the injured party for actual losses incurred, and nominal damages, which are small sums awarded when a legal wrong has occurred but no actual financial loss can be proven. Additionally, liability policies are generally designed to cover incidents that occur within the policy period.

Exemplary damages, often referred to as punitive damages, are awarded in certain cases to punish the wrongdoer rather than to compensate the victim. Because these are intended as a deterrent for particularly egregious behavior, many liability policies exclude coverage for these types of damages to avoid moral hazard, where insured individuals might engage in reckless behavior knowing they would not bear the financial consequences.

In summary, while liability insurance typically covers compensatory and nominal damages, and addresses incidents occurring within the policy period, it does not typically cover exemplary (punitive) damages, making the correct choice that which indicates the exclusion of exemplary damages from coverage.