Which of the following best describes liability insurance?

Liability insurance is designed to protect individuals or businesses from legal claims that arise from injuries or damages they may cause to others. This type of insurance covers the costs associated with property damage claims, as it provides financial protection when the insured party is found liable for harming someone else's property. It is important to understand that liability insurance does not cover the insured's own property damage but rather the damage caused to third parties.

While it is true that it encompasses property damage claims, the other options do not accurately capture the full scope of liability insurance. The misconception that liability insurance is only for commercial entities overlooks that many individuals also require personal liability coverage, such as homeowners or renters insurance. Additionally, the coverage does not specifically address personal accidents or employee injuries; those scenarios are typically covered under other types of insurance, like personal accident insurance and workers' compensation respectively.