Liability coverage is primarily designed for which "party" coverage?

Liability coverage is fundamentally intended to protect the third-party claimant. This means that when an insured individual is legally liable for causing harm or damage to another person or their property, liability coverage steps in to cover the damages awarded to the third party. This coverage ensures that if the insured is found responsible for an accident or incident, there are financial resources available to compensate the injured party, thereby protecting them from the risks of undercompensation.

The purpose of liability insurance focuses on offering protection to those who suffer losses due to the insured's actions, rather than providing a direct benefit to the insured party themselves. This is crucial in maintaining a fair system where those who are harmed can seek and receive compensation, while the insured is safeguarded from potentially devastating financial repercussions. Therefore, the design and function of liability coverage center on the needs of third-party claimants, fulfilling the fundamental requirement of liability insurance to address the claims arising from damages inflicted by the insured.