What is first-party insurance coverage designed to do?

First-party insurance coverage is specifically designed to provide financial protection to the insured party for their own losses. This type of coverage focuses on restoring the insured person's financial position after a loss, which aligns with the purpose of helping policyholders recover from incidents that directly affect them—such as damage to their property or personal injuries.

For instance, if a homeowner experiences damage to their residence due to a covered event like a fire, first-party insurance would help cover the costs of repairs or replacement of the damaged property. This ensures that the policyholder does not suffer financially due to circumstances beyond their control.

Other choices focus on different aspects of insurance. Coverage for third-party damages is typically related to liability insurance, which protects against legal claims made by others due to damages caused by the policyholder. Covering legal liabilities against others also attests to liability insurance rather than first-party coverage. Offering coverage for future financial gains is not the objective of insurance, which generally aims to manage risk rather than guarantee profits or gains. Thus, the correct answer accurately captures the essence of what first-party insurance is designed to do.