What is liability insurance designed to protect against?

Liability insurance is specifically designed to provide financial protection to the insured in the event they are held legally responsible for causing injury or damage to another party. This type of insurance covers costs associated with lawsuits and claims, which can include legal fees, settlements, and judgments awarded to the claimant.

The purpose of liability insurance is to mitigate the financial burden that arises from potential legal issues, allowing individuals or businesses to operate with a degree of safety against claims related to negligence or unintentional harm to others. It plays a vital role in protecting assets and ensuring that the insured can manage the consequences of legal actions that may arise from their activities.

Other options do not accurately reflect the scope of liability insurance. For instance, theft protection pertains to personal property insurance, and medical expenses are usually covered under health or medical insurance policies. Damage to the insured’s property is typically covered under property insurance, rather than liability insurance, which focuses specifically on third-party claims.