Definition - What does Liability Insurance mean?
Liability insurance is a type of insurance coverage that provides protection to a person or entity against the risk of getting sued and being held legally responsible for malpractice, negligence, injury to other persons, or similar claims. Besides covering the legal costs of a facing a lawsuit, it also pays for any legal payouts in case the insured is found legally liable. However, it generally excludes intentional harm and contractual liabilities.
Insuranceopedia explains Liability Insurance
Liability insurance is often critical for business owners, professionals, and other individuals who need to protect themselves against liabilities arising from the exercise of their profession and distribution of their goods to the public. For instance, medical practitioners purchase malpractice insurance to financially cover the substantial payout such a suit might cost them, and many business owners purchase liability insurance to protect against lawsuits from employees who become injured at work or during business operations.
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