What does liability insurance primarily cover?

Liability insurance primarily covers the financial obligations arising from legal responsibilities for causing injury to others and damage to their property. This type of insurance is designed to protect the insured from claims resulting from accidents or incidents where they are determined to be at fault.

For instance, if an individual inadvertently causes an auto accident that injures another person or damages someone else's vehicle, liability insurance will help cover the medical expenses, legal fees, and property repair costs associated with that claim. This protection is essential for individuals and businesses alike, as it safeguards them from financial burdens that could arise from lawsuits or settlements resulting from their actions.

In contrast, options focusing on physical damage to property, injury to oneself, or loss of income pertain to other types of insurance coverage, like property insurance, health insurance, or disability insurance, which do not address third-party liability. Thus, understanding the primary function of liability insurance reinforces its critical role in financial protection against claims made by others.