Which of the following refers to a contract that compensates someone for losses due to negligence?

Which of the following refers to a contract that compensates someone for losses due to negligence?

• A. Health insurance
• B. Property insurance
• C. Liability insurance
• D. Life insurance

Answer: (C)

Liability insurance is a contract designed to provide compensation for losses arising from negligence. This type of insurance protects individuals and businesses from claims resulting from injuries and damage to people or property. The key feature of liability insurance is that it covers legal costs and payouts for which the insured party is found liable, making it essential for mitigating risks associated with negligent actions. Health insurance, on the other hand, focuses primarily on covering medical expenses related to health issues rather than liability for negligence. Property insurance is concerned with protection against damage or loss of physical assets due to events like fire or theft, rather than compensating for harm caused to others. Life insurance provides a monetary benefit to beneficiaries upon the death of the insured, which is unrelated to issues of negligence or liability. Therefore, the focus of liability insurance on negligent actions and the financial protection it offers makes it the correct choice in this context.

Liability insurance is a contract designed to provide compensation for losses arising from negligence. This type of insurance protects individuals and businesses from claims resulting from injuries and damage to people or property. The key feature of liability insurance is that it covers legal costs and payouts for which the insured party is found liable, making it essential for mitigating risks associated with negligent actions.

Health insurance, on the other hand, focuses primarily on covering medical expenses related to health issues rather than liability for negligence. Property insurance is concerned with protection against damage or loss of physical assets due to events like fire or theft, rather than compensating for harm caused to others. Life insurance provides a monetary benefit to beneficiaries upon the death of the insured, which is unrelated to issues of negligence or liability. Therefore, the focus of liability insurance on negligent actions and the financial protection it offers makes it the correct choice in this context.