All persons (not only business entities) are liable by law for damage that they cause to third parties. This can mean damage caused by a defective product or an incorrectly performed service, property ownership, leasing and other activities of the company. It is important to realise that such damage can have existential consequences for your company. Liability insurance primarily covers damage to health or property, and financial damage resulting from such damage to health or property. You can also take out insurance for a number of other types of damage, such as recourse claims of health insurance companies, damage to foreign items taken over and used, damage to health caused by unsafe food, environmental damage, net financial loss, etc.
A specific extension of this product is insurance for the costs of disassembling defective products and assembling faultless products, or withdrawing defective products from the market, which comprises other types of costs.