Liability in insurance refers to the legal responsibility of an individual or entity for causing harm or damage to another person or property. This concept is central to various types of insurance policies, including general liability, professional liability, and auto liability insurance, which provide coverage for claims arising from these responsibilities. When a policyholder is deemed liable for an accident or incident, their liability insurance covers the costs associated with the damage or injury.

This can include medical expenses, legal fees, repair costs, and any settlements or judgments awarded to the injured party. The extent of this coverage is determined by the policy limits, which set the maximum amount the insurer will pay for a covered claim. Liability insurance is essential for protecting individuals and businesses from financial loss resulting from their actions or negligence. For example, in auto insurance, liability coverage pays for damages if the policyholder is at fault in a car accident.

In a business context, general liability insurance protects against claims related to injuries or property damage that occur on the business’s premises or as a result of its operations. Understanding liability and having appropriate insurance coverage is crucial for mitigating financial risks and ensuring legal and financial protection in case of unforeseen events that result in harm or damage.