What is liability insurance designed to do?

Liability insurance is specifically designed to provide protection against claims resulting from injuries and damages to other people or their property for which the insured is found legally responsible. This type of insurance covers costs associated with legal defense, settlements, or judgments that arise from lawsuits or claims against the insured.

In the context of various insurance types, liability insurance does not cover losses related to the insured's own property or expenses. For instance, while some insurance policies may address medical costs for the insured or repair costs for their own vehicle, those are not the primary functions of liability insurance. Instead, liability insurance focuses on compensating third parties who suffer losses due to the actions or negligence of the insured. This makes it an essential component of financial protection, particularly in contexts such as auto insurance, homeowners’ insurance, and professional liability insurance.