What is "liability insurance" designed to protect against?

Liability insurance is specifically designed to protect individuals and entities from the financial consequences of being held responsible for bodily injury or property damage caused to another person or their belongings. When someone is found legally liable for causing harm, they may face substantial costs in terms of legal fees, settlements, or judgments. Liability insurance helps cover these expenses, providing financial protection and peace of mind for the insured.

In this context, the option referring to bodily injury or damages caused to others is accurate, as it encapsulates the primary purpose of liability coverage—ensuring that the policyholder does not have to bear the full brunt of financial losses resulting from their actions that cause harm to others. This is crucial for individuals with assets to protect, as a significant claim could jeopardize their financial stability.

The other options pertain to different types of insurance. Costs associated with property damage are often covered under property insurance, while medical care for the policyholder falls under health insurance. The loss of future income due to unemployment is typically addressed by unemployment insurance, rather than liability insurance. Therefore, the focus of liability insurance is aptly captured in the choice regarding bodily injury or damages caused to others.