What kind of policy protects an individual against damages caused by the actions of another party?

Liability insurance is designed specifically to protect individuals or businesses from the financial repercussions of claims made by others for damages or injuries caused by their actions. This type of insurance covers legal fees, medical expenses, and any settlements or judgments that may arise from lawsuits. It is essential for individuals who may be at risk of being held responsible for unintentional harm or damage to other people or their property, making it a crucial component in safeguarding one's financial well-being.

Other options, such as sole proprietorship insurance, cover different aspects of business risks and do not specifically address liability issues related to actions toward others. Workers' compensation insurance focuses on protecting employees who get injured or become ill due to job-related activities, while property insurance deals with the protection of one’s own physical assets against loss or damage. Each of these options serves distinct insurance needs but does not provide the same type of coverage offered by liability insurance.