What does liability insurance typically cover?

Liability insurance is designed to protect individuals and businesses from the financial consequences that arise when they are found legally responsible for causing harm to others. This typically includes coverage for legal costs associated with defending against claims of negligence, as well as any damages that may be awarded as a result of those claims. For instance, if someone were to sue for injuries sustained due to an accident caused by the insured, liability insurance would help cover legal fees and any settlements or judgments that might be ordered by the court. This aspect is critical for individuals and businesses to manage the risks associated with potential lawsuits that could have substantial financial implications.

In contrast, the other options refer to different types of coverage. Accidental damage to property relates to property insurance, medical expenses for the insured align with health insurance policies, and losses due to fire or theft fall under property insurance or specific event-related policies. Therefore, these do not fall under the purview of liability insurance, reinforcing the importance of understanding the specific coverage each type of insurance provides.