Washington State Insurance Practice Exam

What does liability insurance protect against?

1. Natural disasters and acts of God

2. Claims resulting from injuries and damages

3. Losses from theft or fraud

4. Damage to personal property only

The correct answer is: Claims resulting from injuries and damages

Liability insurance is designed to protect individuals and businesses from claims arising due to injuries or damages they may cause to another person or their property. This type of insurance covers the legal costs and any settlements or judgments that may occur as a result of lawsuits related to these claims. When someone is held responsible for an accident that injures another person or damages someone else's property, liability insurance provides financial support to cover those costs. It is essential for protecting assets and ensuring that individuals can manage unforeseen legal obligations resulting from such incidents. In contrast, liability insurance does not cover natural disasters or acts of God, which are typically addressed through property insurance. It also does not protect against losses from theft or fraud, focusing instead on third-party claims. Additionally, liability insurance extends beyond just damage to personal property, incorporating a broader range of potential claims that may arise through interactions with others. Thus, the protection it offers is specifically focused on legal liability for injuries and damages caused to third parties.