What is meant by a 'liability insurance'?

Liability insurance is designed to provide protection against legal claims that can arise from injuries or damages caused to other people or their property. This type of insurance covers the costs associated with legal defense and any settlements or judgments that may result from a lawsuit. It is essential for individuals and businesses, as it helps manage financial risks associated with everyday activities that could potentially lead to lawsuits, such as automobile accidents, slip and fall incidents, or professional errors.

The other options provided do not accurately capture the essence of liability insurance. Insurance that focuses solely on property damage, insurance that deals with life-threatening events, or insurance intended specifically for natural disasters does not encompass the broader scope of liability coverage, which specifically addresses the potential legal exposures that one may face.