West Virginia Adjusters Practice Exam

Which of the following best defines 'liability insurance'?

1. Insurance that protects against business losses

2. Insurance that covers health-related expenses

3. Insurance that provides protection against claims from injuries

4. Insurance that pays for temporary living expenses

The correct answer is: Insurance that provides protection against claims from injuries

Liability insurance is best defined as insurance that provides protection against claims arising from injuries or damages that the insured party may cause to another individual or their property. This type of insurance is essential as it covers legal costs and settlements or judgments related to claims of negligence or misconduct. In the context of both personal and business environments, having liability insurance safeguards the insured from potential financial burdens that could arise from lawsuits or claims made against them. This type of coverage ensures that the insured is protected in scenarios that involve third-party injuries or damages, which can happen in various situations—from a slip and fall accident on a business property to damages caused by a defective product. Being adequately covered by liability insurance allows individuals and businesses to operate with greater confidence, knowing they have a safety net against unexpected legal claims.