When you have dealt with someone and you have made damage to that someone that makes him or her sue you for damages, if you have a liability insurance, the insurance company will be the one paying for the expenses. You pay for the premium of the policy at a standard rate which is for a specific set of coverage. When things go wrong, it usually does in a blown out proportion which may leave you bankrupt if you have no liability insurance. With it, you have given yourself the chance to spend just a fraction of what could have caused you without it.