What is the best explanation of liability insurance?

Liability insurance is designed specifically to protect individuals or businesses from the financial consequences that arise when they are found legally responsible for causing injury or damage to another party due to their negligence. This type of insurance covers legal costs and damages awarded in lawsuits, as well as any settlements that may arise from claims made against the insured.

Choosing this option highlights the essence of liability insurance—it’s not focused on covering the insured’s own losses or health-related issues, but rather on protecting them from the financial implications of their actions that harm others. By covering damages resulting from accidents or negligence, liability insurance plays a crucial role in ensuring that the insured can meet their legal obligations without suffering severe financial hardship.