Liability insurance is a part of the general insurance system of risk financing to protect the insured from the risks of liabilities imposed by lawsuits and similar claims. It protects the insured in the event he or she is sued for claims that come within the coverage of the insurance policy. The Personal Liability insurance automatically covers you in case you are accused of slander, causing mental anguish or bodily harm. Even in the most frivolous cases, you may become overwhelmed in legal fees just to clear your good name. The insurance is also in effect for other family members living as part of the household, e.g. parents (-in-law), brothers or sisters. The liability of domestic servants and pets is also covered.