Which of the following best describes the purpose of liability insurance?

The purpose of liability insurance is best described as providing protection against claims resulting from injuries and damage to others. This type of insurance is designed to safeguard individuals and businesses from legal responsibilities that arise due to their actions or negligence, which can lead to bodily injury or property damage to third parties. Liability insurance can cover legal defense costs, settlements, and judgments, thus offering a financial safety net for policyholders when faced with lawsuits or claims.

The focus of liability insurance is on protecting against potential risks associated with interactions with the public and other parties, ensuring that the insured can manage the financial impact of claims without jeopardizing their business's financial stability. Examples include general liability insurance, professional liability insurance, and product liability insurance, all of which serve to mitigate risks linked to specific activities or operations of a business.

Other options address different concerns. For instance, covering medical expenses for employees relates to workers' compensation insurance, which is a separate type of coverage focusing specifically on employee injuries at work. Insuring business property from natural disasters pertains to property insurance, which is aimed at protecting physical assets rather than liability risks. Lastly, covering all operational costs falls under business interruption or operational expense coverage, which does not align with the specific protection provided by liability insurance. Each of these