Massachusetts Life Producer Practice Exam

Which type of insurance focuses on covering liability for injuries to others?

1. Property Insurance

2. Life Insurance

3. Liability Insurance

4. Health Insurance

The correct answer is: Liability Insurance

Liability insurance is specifically designed to provide coverage for legal responsibilities when an individual or business is found liable for causing injury or damage to others. This type of insurance protects the policyholder by covering costs associated with medical expenses, legal fees, and any settlements or judgments that may arise from lawsuits filed by third parties due to injuries they sustained. For example, if a person accidentally injures someone during a social gathering, liability insurance would cover the medical costs of the injured party and any legal expenses related to the ensuing claim against the individual responsible for the accident. This coverage is essential for anyone who engages in activities that may potentially lead to harming others, providing both financial protection and peace of mind. In contrast, property insurance protects against damages to the policyholder's own property, life insurance provides financial support to beneficiaries upon the insured's death, and health insurance covers medical expenses incurred by the policyholder but not liabilities toward others. Each of these types addresses different aspects of financial protection, but only liability insurance specifically focuses on covering financial obligations to others for injuries or damages incurred.