What is the primary purpose of liability insurance?

Liability insurance is specifically designed to protect individuals and businesses from claims that may arise due to injuries or property damage caused to others. This type of insurance provides financial coverage against lawsuits or claims resulting from accidents or incidents where the insured party is found legally responsible. The primary purpose of liability insurance is to offer legal defense costs and settlements or judgments if claims are made against the policyholder.

While the other options touch on important aspects of insurance, they do not specifically align with the main function of liability insurance. For example, covering lost income addresses a different insurance need related to business interruption, while savings and investment options are more characteristic of life insurance or other financial products. Similarly, while medical expenses are related to health insurance or personal injury protection, they do not fall under the scope of liability coverage, which is focused on third-party claims for injuries or damages.