What does liability insurance protect against?

Liability insurance is designed to protect individuals and businesses from the financial repercussions associated with claims of injury or damage they may cause to others. This includes situations where a person or entity is deemed responsible for an accident that results in bodily injury or property damage to a third party. By covering legal fees, settlements, or judgments that may arise from these claims, liability insurance serves as a critical financial safety net.

The other options do not pertain to the primary function of liability insurance. Theft of personal property typically falls under property insurance coverage, which protects against the loss of personal belongings due to theft. Natural disasters impacting property usually involve home or business insurance that covers damages from events like floods or hurricanes. Lastly, loss of rental income is generally covered under specific endorsements or policies related to property insurance rather than liability insurance. This distinction is essential in understanding the scope and purpose of different types of insurance coverage.