Texas Property and Casualty License Practice Exam – Complete Prep Guide

Business liability insurance is designed to protect a business from potential legal claims arising from accidents, injuries, or damages that occur during the course of business operations. This type of insurance covers legal defense costs and any settlements or judgments that the business may be required to pay if it is found liable for causing harm to a third party.

By providing this protection, business liability insurance helps safeguard the financial health of the business, ensuring that it can continue to operate despite the potentially high costs associated with legal claims. This type of coverage is crucial for maintaining confidence among clients, consumers, and stakeholders, as it demonstrates that the business is prepared to manage risks associated with its activities.

The other options focus on different areas of coverage that do not specifically address the intent of liability insurance. For example, covering personal damages of employees pertains more to workers' compensation, while insuring business properties from theft relates to property insurance. Covering health expenses of business owners involves health insurance, which is not within the scope of business liability insurance.