liability insurance

Insurance against claims of loss or damage for which a policyholder might have to compensate another party. The policy covers losses resulting from acts or omissions that are legally deemed to be negligent and that result in damage to the person, property, or legitimate interests of others. It was principally the introduction of the automobile that spurred the rapid growth of this form of insurance, which now extends to a great many activities in addition to driving, including malpractice insurance for doctors and other professionals, marine liability for boat owners and operators, and product liability for manufacturers of consumer goods. See also casualty insurance, consumer protection.

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