What is one primary purpose of casualty insurance?

Casualty insurance primarily serves to protect individuals and businesses from legal liabilities that may arise from injuries or damage to third parties. This coverage is essential because it helps policyholders defend against claims or lawsuits that can result from their actions or negligence. For example, if someone is injured on a property or if a driver causes an accident, casualty insurance will cover the legal costs and any settlements or judgments against the insured party.

This aspect of liability protection is crucial because it ensures that the insured has financial support for unexpected legal challenges, which can be costly and complex. This type of insurance typically includes various policies designed to handle different types of liability, such as general liability insurance, professional liability insurance, and workers’ compensation, all of which address different aspects of potential legal exposure.

In contrast, other forms of insurance mentioned, such as coverage for natural disasters or personal losses, while important, do not encompass the primary function of casualty insurance, which is about legal obligations to others rather than covering losses to one’s own property or direct personal damage. Thus, the primary focus on liability protection clearly identifies why this option aligns with the core purpose of casualty insurance.