Liability Insurance

Liability insurance is a part of the general insurance system of risk transference. It is designed to offer specific protection against third party claims, i.e., payment is not typically made to the insured, but rather to someone suffering loss who is not a party to the insurance contract.
When a claim is made, the insurance carrier has the right to defend the insured. The legal costs of a defence are not affected by any policy limits, which is useful because they can be significant where long trials are held to determine either fault or the amount of damages.