What type of risk does liability insurance specifically address?

Liability insurance specifically addresses the risks associated with injury and damage to others. This type of insurance provides coverage for claims made against an insured party for bodily injury, property damage, or personal injury that they may have caused. By protecting individuals or businesses from legal claims, liability insurance is crucial for managing the risks involved in daily operations, particularly in fields where interactions with clients and the public are common.

This coverage helps ensure that the policyholder can financially respond to claims and lawsuits, thereby safeguarding their personal assets and business operations. It encompasses various forms, including general liability insurance, professional liability insurance, and product liability insurance, each tailored to specific scenarios where a party could be held liable for harming someone else.

When considering the other options provided, property damage risks primarily relate to coverage for physical assets rather than liabilities to others. Breach of contract risks deal with legal implications stemming from not fulfilling contractual obligations, which is distinct from liability coverage. Lastly, market fluctuations pertain to economic variables affecting business profitability and are unrelated to liability considerations. Thus, the focus of liability insurance is fundamentally on covering injuries and damages inflicted upon other parties, making that the appropriate choice.