The Purpose of Liability Insurance

Compensation and Other Judgments
For example, class actions lawsuits, which are often brought against big business, are meant to provide compensation for victims, as well as reinforce the idea that the safety of people is more important that any business practice. Recently, there was a class action lawsuit involving illegal dumping by a major car company in New Jersey. That illegal dumping resulted in harm to the environment and to the people that lived there, in the form of cancer and other health ailments. Although the companies liability insurance covered much of the compensation settlement, the prosecutors sought to reiterate the value of people over the profit of a company.

The purpose of tort cases is to show that people, and businesses are liable when they behave in a manner that can cause harm to others. Liability insurance is not meant to provide the accused an easy way out of their responsibility for the negative outcome. Tort cases make examples out of the guilty parties, in the hopes that similar negative outcomes can be prevented in the future.

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