What is the main purpose of liability insurance?

The main purpose of liability insurance is to protect against claims for damages. This type of insurance provides coverage when the policyholder is found legally responsible for causing harm to others, whether it be bodily injury or property damage. For instance, if an individual causes a car accident and is sued for the damages, liability insurance would help cover the costs of legal fees and any settlements or judgments that arise from the lawsuit.

This protective aspect is vital for individuals and businesses alike, as it mitigates financial risks associated with unforeseen incidents that could lead to significant monetary losses. In essence, liability insurance is a safeguard that helps ensure that the policyholder can meet their legal obligations without suffering severe financial consequences.