What type of law governs liability insurance?

The correct answer pertains to tort law, which is essential in understanding liability insurance. Liability insurance is designed to protect an individual or entity from the risks of being sued for negligence or harm caused to another person. This legal protection primarily stems from the principles of tort law, which deals with civil wrongs and the compensation for damages caused by such wrongs.

Tort law focuses on cases where an individual's actions can cause harm to another, leading to claims for damages. Because liability insurance specifically addresses scenarios where the insured party may be held liable for injuries or damages suffered by others, it falls under the purview of tort law. The insurance then provides a financial safety net, ensuring that when claims arise from tortious conduct, the insurer can help cover the costs associated with legal defense and settlements or judgments.

The other types of law mentioned, such as contract law, primarily deal with agreements between parties, property law focuses on the rights related to ownership and use of property, and criminal law governs actions that are offenses against the state and involve prosecution by the government. While these areas of law can intersect with liability issues—especially in cases that involve contracts or property—the fundamental framework specifically governing liability insurance is rooted in tort law.