What is the primary purpose of liability insurance?

The primary purpose of liability insurance is to protect the insured from legal claims. This type of insurance is designed to cover the costs associated with legal defense, settlements, or judgments that may arise from claims made against the insured for incidents where they are held responsible. Liability insurance is crucial for individuals and businesses alike, as it mitigates the financial impact of lawsuits stemming from accidents, injuries, or damages to third parties.

For instance, if a driver causes an accident that results in injury to another person, liability insurance will help cover the medical expenses and any legal fees associated with the claim brought against the driver. This creates a financial safety net, allowing the insured to manage risks associated with their actions or negligence without facing crippling financial losses.

The other options fail to encompass the complete function of liability insurance. Limiting the coverage to property damages or focusing solely on health benefits or discounts does not address the broader legal protection that liability insurance provides in managing risks and safeguarding against claims.