Which of the following best describes "liability insurance"?

Liability insurance is designed to protect an individual or business from claims resulting from injuries and damage to third parties or their property. This type of insurance covers the costs associated with legal defense and any settlements or judgments that may arise from such claims. It is essential for safeguarding the insured against financial loss when they are found to be responsible for causing harm to others, either through negligence or other actions.

The focus of liability insurance is primarily on the responsibility of the insured toward others, rather than covering their own property or personal injuries directly. For example, if someone were to cause an accident that injures another person or damages their property, liability insurance would help cover those costs, underscoring its role in protecting against claims from external parties.

In contrast, other options discuss different types of insurance. The first option relates to property insurance, which is focused on covering damages to the insured's own property. The third option specifically addresses economic losses, which may not encompass the broad coverage of liability. Finally, the fourth option pertains to bodily injury coverage directed at the insured, which is separate from liability coverage, as it does not address claims made by or against others.