What is the primary purpose of liability insurance?

Liability insurance primarily serves to protect individuals and organizations from potential legal claims made by third parties. This type of insurance provides coverage for legal costs, settlements, and judgments arising from claims of negligence or failure to perform in accordance with a duty that results in injury or damage to another party. It effectively helps to mitigate the financial risks associated with legal liabilities that businesses or individuals may face in daily operations or activities.

For example, if a customer gets injured on a business's premises, liability insurance can cover the costs associated with the legal claim made against the business. This protection is crucial for businesses, as legal claims can lead to significant financial burdens. Additionally, liability insurance helps foster trust in professional relationships, knowing that there is a layer of financial protection in place should an issue arise.