What is the main purpose of liability insurance?

Liability insurance is designed primarily to provide financial protection against claims made by others for damages. This form of insurance covers the policyholder in situations where they are legally responsible for harming another party, whether it be through property damage, bodily injury, or other related claims.

For example, if an individual is involved in an accident where they are at fault and cause injury to another person or damage to someone’s property, liability insurance will cover the costs associated with that claim, including legal fees and any settlements that may be required. This type of coverage is crucial because it helps protect the insured from significant financial losses that could arise from lawsuits or claims related to their actions.

Other types of insurance, such as health insurance, vehicle insurance, or homeowners insurance, cover different aspects like health expenses, vehicle damage, or personal property protection, but they do not provide protection against third-party claims, which is the fundamental purpose of liability insurance.