Liable in law is defined as "responsible or responsive in law; legally bound." Legal responsibility pertains to both civil and criminal law and can result from a variety of legal issues, including contracts, torts, taxes, and fines imposed by governmental bodies. It is the claimant who tries to establish or demonstrate liability.

Liability insurance protects the insured party from lawsuits brought about by third-party property damage and bodily injury claims. Liability insurance pays for defense expenses as well as any settlements for which the insured party would be held liable. Contractual obligations and intentional or willful harm are not covered by liability insurance.

If you could be held responsible for someone else's injuries or if you damage someone else's property and are found to be at fault, you need liability insurance. Anyone who operates a business, operates a vehicle, performs medicine, or is an attorney must carry liability insurance; in other words, anyone who could be held liable for injuries or property damage.

Effective liability risk management can lessen the likelihood that your company will be sued, but it can never completely remove the danger. A mistake made by you or a member of your team could result in someone getting hurt or something getting broken. Your error might compromise the privacy or hurt the reputation of a patron, client, rival, or member of the public. When such injuries take place, you might be held legally responsible for compensating someone who loses anything as a result of your acts or inaction.

A lawsuit could put your company out of business depending on the severity of the damage, the number of individuals hurt, and/or the value of the property damaged. Even if your company is finally found to have done nothing illegal, a tenacious plaintiff can drag out the legal process for a very long time and cost you a lot of money to defend yourself. Liability insurance covers your defense expenses and safeguards your assets.