What is the primary purpose of liability insurance?

The primary purpose of liability insurance is to provide financial protection when the insured is held liable for causing bodily injury or property damage to another person as a result of their negligent actions. This type of insurance covers the costs associated with claims made against the insured, including medical expenses for injuries sustained by a third party and compensation for property damage.

Liability insurance is crucial because it helps individuals and businesses manage the financial risks associated with everyday activities that could potentially lead to legal claims. In situations where someone is injured or their property is damaged due to the insured's actions, liability insurance ensures that there are sufficient funds available to address these claims, ultimately helping to protect the insured's financial stability.

Considering the other options: while they relate to different areas of insurance coverage, they do not encompass the core function of liability insurance, which is centered around third-party injuries and damages rather than personal property loss, legal fees incurred by the insured directly, or theft of personal belongings.