What is a liability insurance?

Liability insurance is fundamentally designed to protect individuals and businesses from claims arising due to injuries or damage to other people. This type of insurance comes into play when the insured party is found legally responsible for causing harm to others, whether it's physical injuries, property damage, or personal injury claims. It helps cover the legal costs associated with defending against such claims as well as any settlements or judgments that may arise from them.

This coverage is essential for individuals and businesses alike, as it mitigates the financial risks associated with legal liabilities. For instance, if someone is injured on a property you own or due to your actions, liability insurance would cover the medical expenses and any legal fees incurred in defending against the claim.

The other options do address aspects of insurance but do not encapsulate the broader scope of liability insurance. The first choice is specific to property damage claims, which are certainly a component of liability insurance but do not reflect the complete picture. The third choice, which refers to covering only physical assets, misses the essence of liability coverage entirely. Lastly, the fourth choice pertains to unemployment insurance, which serves a completely different purpose and does not relate to liability at all. The focus of liability insurance specifically on claims for injuries and damages to people underlines why the