Which of the following best describes liability insurance?

• A. Insurance for property loss only
• B. Insurance for vehicle damages
• C. Insurance that protects against claims of negligence
• D. Insurance that covers natural disasters

Answer: (C)

Liability insurance is best described as insurance that protects against claims of negligence. This type of insurance is designed to provide coverage in situations where an insured party is found legally responsible for causing injury or damages to another person or their property. It covers legal costs and damages that the insured may need to pay if they are held liable.

For example, if a person accidentally injures someone else or damages their property, liability insurance would help cover the cost of the resulting claims or lawsuits. This is a crucial aspect of personal and business insurance, as it helps safeguard finances and provides peace of mind in case of unforeseen events where negligence is a factor.

The other options provided do not accurately capture the essence of liability insurance. Insurance for property loss pertains specifically to damage to physical assets, while insurance for vehicle damages relates specifically to auto insurance coverage—not general liability. Insurance that covers natural disasters addresses specific perils and does not encompass the broader context of liability associated with negligence claims.