What is a fundamental goal of liability insurance?

A fundamental goal of liability insurance is to provide financial protection against claims. This type of insurance is designed to help individuals and businesses cover the costs associated with legal liability, including damages awarded in lawsuits or settlements arising from injuries or damages caused to others. By providing this financial protection, liability insurance helps policyholders manage the financial risks associated with their activities and reduce the potential impact of unforeseen accidents or incidents.

Liability insurance does not eliminate all risks, as it primarily functions to mitigate financial consequences rather than prevent occurrences. It also does not cover all types of damages regardless of cause; certain exclusions may apply based on the policy terms. Additionally, while liability insurance can cover various types of claims, it is not limited to providing protection against property loss alone; it typically addresses bodily injury, property damage, and legal defense costs associated with covered claims.