What does 'liability insurance' specifically cover?

Liability insurance is specifically designed to cover an individual's or entity's legal responsibilities to others for injuries or damages that they may cause. This type of insurance provides financial protection against claims resulting from accidents, injuries, and damages that the insured party is legally obligated to pay. It is crucial for protecting assets and ensuring that individuals or businesses can cover legal costs and settlements in the event of a lawsuit.

For example, if someone is injured on a property and the owner is found to be negligent, liability insurance would help cover the legal expenses and any compensation awarded to the injured party. This highlights the primary purpose of liability insurance: to safeguard against the financial repercussions of being held responsible for harming others.

While the other options relate to different types of insurance or coverage areas, they do not fall under the specific scope of liability insurance. Property damage from natural disasters is typically covered under property insurance, personal medical expenses are handled by health insurance, and business interruption losses would require business income insurance rather than liability coverage.