Civil liability insurance covers the reparations and compensation that the insured party has to pay for damage to property or personal injury accidentally caused to third parties.
These damages can occur both inside and outside the property (a tile that falls and hits someone, raised flooring that makes someone trip over) and may be caused in the property itself or caused directly by the insured party or members of the family living in the property. For example, if your child breaks a neighbour's window, it will be you who is liable and who they will claim compensation from.
Beyond deterioration and damages caused to the contents or personal belonging, including short circuits and burst pipes, this policy can also cover damages caused by pets (provided said damages are not caused by a potentially dangerous dog), damages caused while playing sport as an amateur, food poisoning of a guest etc.
If the property is rented out, the landlord is only liable for damages caused by their personal belongings or the contents of their property, consequently, they are not civilly liable for damages caused to third parties by the tenant. Therefore, regardless of whether the homeowner also includes this cover in their policy, it is the tenant who must cover their own civil liability.