What is liability insurance?

Liability insurance provides your company with protection in situations where it is found to be legally liable to someone else. The most common example is where a company loses a lawsuit based on negligence (for example, if your business negligently left an obstacle on the office floor which caused a customer to trip and break their foot). Such liability insurance helps to cover not just the costs of your liability (i.e., the damages you must pay) but often it helps cover the actual costs of the lawsuit itself (i.e., it pays for the lawyers). As for the specifics of what is covered, and to what extent, you can discuss your needs with your insurance agent and determine what will best suit your purposes.