ABSTRACT
The purpose of liability insurance is obvious to most. One purpose is the compensation of the victim. Liability insurance under which the insurer is usually obliged to defend the policyholder is hard to find — in England, but in the USA that possibility is one of the features that motivate people to buy liability insurance. For liability insurance a helpful starting point is the definition found in Australia where, according to section 11(7) of the Insurance Contracts Act 1984, liability insurance is a contract of general insurance that provides cover in respect of the insured's liability for loss or damage to another person. It is insurance that indemnifies liability to third persons, thus providing cover against a consequent depletion of the insured's assets. The range of liability insured, however, may well be limited by the contract of insurance, which may be described as liability insurance, but may also be described as all risks insurance or even property insurance.
