What does liability insurance help cover in the event of a lawsuit?

Liability insurance is specifically designed to protect individuals and businesses against claims resulting from injuries or damages caused to other people or their property. In the event of a lawsuit, liability insurance can cover legal expenses, settlements, or judgments that arise when one party is found legally responsible for harming another. This type of insurance serves as a safety net, ensuring that the insured party can manage the financial implications of claims made against them, thus providing peace of mind.

The other options do not align with the fundamental purpose of liability insurance. Internal company operations typically fall under different types of business insurance, like general liability or workers' compensation. Personal purchases are generally not covered by liability insurance but may fall under personal property insurance or specific product warranties. Claims denied by other insurances would not be addressed by liability insurance since it is intended to cover specific claims related to liability rather than filling gaps from other insurance denials.