What is legal liability in the insurance context?

In the insurance context, legal liability refers to the responsibility an individual or entity has when their actions lead to harm or loss to another party. This can arise in various situations, such as when someone is involved in an accident that causes damage to another person's property or injures another person. When an insured party is involved in such an incident, they may be held legally liable and thus responsible for compensating the affected party for their losses, which is why involvement in an accident resulting in a claim relates directly to legal liability.

In addition, this concept is pivotal in casualty insurance, as these policies are designed to protect insured parties from the financial burden of claims arising from their legal liabilities. By understanding the role of legal liability, individuals can better navigate their insurance needs and ensure they have adequate coverage for potential claims.