How does liability insurance differ from property coverage?

Liability insurance is primarily designed to protect individuals and businesses from third-party claims for harm or damage that they may cause to others. This means it provides financial protection if a business is sued for negligence or if someone sustains injury on their property as a result of the business's activities. The coverage is essential for mitigating risks associated with lawsuits, including legal fees and settlements.

In contrast, property coverage focuses specifically on protecting the insured's own physical assets, such as buildings and equipment, from risks like fire, theft, or natural disasters. It does not extend to liabilities or claims made by outside parties; thus, it does not provide the protection that liability insurance offers against lawsuits or third-party claims.

A key distinction is that while property coverage is concerned with loss or damage of owned property, liability insurance addresses the legal responsibilities to others. Therefore, understanding this difference is crucial for businesses to ensure they are adequately insured for both their assets and their potential liabilities.