Liability coverage is a form of insurance that protects the insured against the risk of being sued or being held legally liable for damage, injury, or other negligence. It pays for both legal fees and payouts in case the insured is found legally responsible.
Liability coverage is especially important for individuals or businesses that have a higher risk of being held liable for injury to others. For example, doctors buy malpractice insurance, businesses with hazardous work environments often opt for it, and many product manufacturers buy product liability insurance in case of defects in the products. Outside of the professional realm, it may be part of auto or homeowners insurance to protect against lawsuits resulting from damage due to or on the insured property, respectively.
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