What is the main purpose of liability insurance?

The main purpose of liability insurance is to protect against legal claims for damages. This type of insurance provides financial coverage for claims arising from injuries or damages that you may cause to another person or their property. For example, if a client or a third party were to suffer an injury or property damage due to your actions or negligence, liability insurance can cover legal fees, as well as any settlements or judgments awarded against you.

This makes it especially vital for individuals and businesses alike, as the costs associated with legal claims can be substantial. Avoiding potential financial ruin due to lawsuits is a primary reason why obtaining liability insurance is a crucial part of risk management. It does not cover theft of property, medical expenses, or personal property loss, which are addressed by other types of insurance, emphasizing the unique role liability insurance plays in protecting against specific legal and financial risks.