What is the primary purpose of liability insurance?

The primary purpose of liability insurance is to provide coverage for damages that the insured is legally obligated to pay. This type of insurance protects individuals or businesses against claims resulting from injuries and damage to other people or property. When a liability claim is made, the insurance typically covers the costs of legal defense, court fees, and any settlements or awards for damages that the insured is found liable for.

Liability insurance is essential for managing risks associated with various activities, as it helps ensure that individuals or businesses can meet their financial obligations if they cause harm to someone else or their property. It is an important safety net that allows individuals and businesses to operate with a degree of security, knowing that they have financial support in case of an unintentional error or accident leading to legal claims.

The other options may highlight certain aspects of liability insurance, but they do not capture its fundamental purpose as effectively as the correct answer. For example, while liability insurance can cover legal fees, it is not solely focused on that aspect; rather, it encompasses a broader responsibility of compensating for damages. Similarly, it does not ensure total recovery for all claims or eliminate risks associated with property ownership, emphasizing that liability insurance is about managing specific legal obligations rather than eradicating all potential risks