Which of the following best summarizes liability insurance?

Liability insurance is designed to provide coverage and protection against legal claims that may arise due to injuries or damages caused to another person or their property. This type of insurance helps cover the costs associated with legal defense, settlements, or judgments resulting from claims made against the policyholder. The primary purpose is to protect individuals and businesses from financial losses stemming from lawsuits resulting from their actions or negligence that cause harm to others.

In contrast, the other options reference different types of coverage: one emphasizes personal property damage, which is typically covered under property insurance; another focuses on personal injuries, typically covered under health insurance or personal injury policies; and the last option describes a limited form of health insurance, which does not pertain to liability protection.

Understanding liability insurance is essential for recognizing how it functions to safeguard against financial risks associated with legal claims, making it a crucial component of personal and business risk management.