Liability insurance is a type of insurance that protects the insured against financial damages resulting from their liability for bodily injury or property damage to third parties. This insurance is essentially designed to protect policyholders from being held liable for damage caused to third parties during the course of their business or professional activities.

Liability insurance can be purchased by businesses, independent professionals, property owners and even ordinary individuals. It can cover the costs associated with third-party claims for injury, damage or financial loss. Depending on the type of coverage selected, liability insurance can cover anything from bodily injury to damage to a company's reputation.