Why do people think calling someone "liberal" is supposed to be insulting?

I wonder the same thing. Especially during national elections in the U.S., this is a nasty game played by conservatives. Instead of debating the issues and offering solutions to problems, they resort to name calling.

Liberals gave us vacations with pay, insurance (at work), the right to vote without challenges to our race, creed, national origin, etc,

So, if that's 'bad', I don't mind being a liberal.

Because that's how people are. We've found many ways to divide ourselves and liberal vs conservative is one of them. Their idea of what a liberal is, isn't the definitive version. They see it as something else, an exaggeration of what it really is. Don't worry about what people label you as, in fact don't succumb to labels at all. I think people going around saying, "I'm a liberal, I'm a liberal!" are just as bad as the ones who use it as an insult.