Which option provides better protection against liability losses?

Adequate liability insurance provides better protection against liability losses because it financially safeguards against the potential costs associated with legal claims or lawsuits. When an individual or organization carries sufficient liability insurance, it ensures that they are able to cover damages or settlement amounts arising from accidents, injuries, or other liabilities associated with their operations.

This type of insurance is designed specifically for the purpose of mitigating the financial impact of unexpected liabilities, often covering legal expenses, court costs, and compensation claims, thus providing peace of mind and stability.

Exculpatory contracts, while they can limit liability, often have limitations regarding enforceability and may not provide protection against all types of claims, particularly those resulting from gross negligence or willful misconduct. Verbal agreements may lack the necessary legal enforceability and clarity, leading to ambiguity in evidence and outcomes in the event of a dispute. Waivers of claims can limit liability to some extent, but they may be challenged in court, especially in situations involving negligence or inequitable circumstances. Therefore, while these options offer some forms of risk management, they do not provide the comprehensive coverage that liability insurance does.