What is liability insurance designed to protect against?

Liability insurance is specifically designed to protect individuals and businesses against claims resulting from injuries and damage they may cause to another person or their property. This form of insurance covers legal costs and any settlements or judgments that may arise in the event of a lawsuit related to these claims.

In practical terms, if someone is injured on your property or if you accidentally damage someone else's belongings, liability insurance helps cover the financial repercussions of those incidents. This means that the insured party is protected from the potentially significant costs associated with legal defense, medical expenses, and compensation claims, enabling them to avoid severe financial consequences stemming from accidents or negligence.

Other options represent areas not covered by liability insurance: accidents without injuries generally do not incur claims; investment losses in stocks pertain to financial markets rather than insurance coverage; and theft or vandalism of items relates more closely to property insurance, which protects against loss or damage to owned assets rather than liability for damages to others.