Which of these statements about liability insurance is true?

Liability insurance is designed to protect individuals and businesses from claims resulting from injuries and damages they may cause to another person or property. The core function of this insurance is to provide coverage against claims for which the insured may be held legally responsible. This coverage not only includes damages awarded to the claimant but can also encompass legal fees and costs associated with defending against those claims.

The statement that it covers damages arising from claims against the insured reflects the fundamental nature of liability insurance, which is to ensure that the insured has financial protection in the event of a lawsuit or legal action due to alleged negligence or other liabilities. In this way, the policy helps mitigate financial losses that can arise from such situations.

In contrast, other statements suggest limitations that do not accurately represent the comprehensive scope of liability insurance. For instance, saying that it only covers property damage or just legal fees excludes the broader protections it offers. Additionally, the notion that liability insurance is not necessary for business owners overlooks the vital role it plays in safeguarding against potential legal claims that could disrupt or financially harm a business.