What is the primary purpose of liability insurance in construction?

Liability insurance in construction primarily serves to protect against third-party claims. This type of insurance is designed to provide coverage in situations where third parties, such as clients, visitors, or other individuals, may suffer injury or property damage as a result of the construction activities. If a person were to get injured on the job site or if the construction work inadvertently causes damage to a neighboring property, liability insurance helps cover the legal costs, settlements, or judgments that may arise from these incidents.

While protecting the business's assets, covering costs related to client disputes, and ensuring compliance with regulations are essential aspects of a construction business, they do not encompass the primary focus of liability insurance. The core function of liability coverage is specifically aimed at mitigating risks related to third-party claims, ensuring that the business can handle unexpected legal challenges without jeopardizing its financial stability.