Which concept involves providing coverage for damages that an individual or organization is legally responsible for?

Liability insurance is designed specifically to provide coverage for damages and legal responsibilities that an individual or organization may incur as a result of harm to another party. This type of insurance typically covers costs related to legal defenses, settlements, or judgments that arise from lawsuits or claims filed against the insured for bodily injury, property damage, or personal injury.

For example, if someone is injured on a property that a business operates, liability insurance would cover the legal expenses and any payouts if the business is found liable. This is essential for protecting assets and ensuring that a policyholder can meet their legal obligations without facing financial ruin.

The other types of insurance focus on different aspects of coverage. Property insurance protects against damage to physical assets owned by the policyholder. Health insurance covers medical expenses incurred by the insured. Auto insurance provides coverage for vehicles and liabilities related to automobile accidents. Each of these types serves a unique purpose, but liability insurance specifically addresses the legal responsibilities and damages one might face.