What is 'liability insurance' primarily designed to protect against?

Liability insurance is primarily designed to protect individuals or businesses against claims arising from injuries and damage to others or their property. This type of coverage plays a critical role in mitigating the financial risks associated with legal claims that can arise from accidents, negligence, or other situations where someone is harmed or their property is damaged due to actions of the insured.

For instance, if a person is found legally responsible for causing an accident that injures another person, liability insurance would cover the legal costs, medical expenses, and any settlements or judgments awarded to the injured party. This protection ensures that individuals and businesses can operate without the fear of significant financial burdens from lawsuits, as liability insurance helps to cover these potential expenses.

Understanding this aspect of liability insurance is crucial for both individuals and businesses to manage risk effectively and ensure they are financially prepared for unexpected incidents.