A:

When you see the term "public liability" attached to a business, its products or its services, it refers to a specific type of legal liability that could result from injury to a member of the public while on company premises. There is an entire subsector of the insurance industry dedicated to providing various forms of public liability protection. On the other hand, legal liability describes the obligation of one party to pay a debt owed to another party.

Legal Liabilities

Legal liabilities are part of civil law and criminal law. For example, if a company commits fraudulent accounting practices or fails to comply with government labor laws, it may face charges in criminal court and will probably be forced to pay damages to concerned parties. This is a criminal legal liability.

It is also possible that a company fails to uphold its end of a contract with another party. Contract disputes are almost always civil issues, not criminal, but courts still award damages. To win damages in a civil or criminal lawsuit, the suing party must prove both the guilt and the legal liability of the alleged violator.

Public Liability Vs. Professional Indemnity

Strictly speaking, everyone has a public responsibility to not cause direct physical harm to other people or their property. This is the type of damage that public liability insurance covers. For example, a general department store like The Home Depot would carry public liability insurance in case a customer injures himself while handling tools inside of the store.

This is different from professional indemnity coverage. Professional indemnity refers to the additional responsibility accepted by a person or company that carries out a professional duty. The purpose of professional indemnity insurance is to protect against alleged breaches of professional conduct.

RELATED FAQS
  1. How might a company's contingent liabilities affect its share price?

    Discover what contingent liabilities are, and how and to what extent such liabilities may have an impact on a company's share ... Read Answer >>
  2. What are some examples of current liabilities?

    Examine some common examples of current liabilities a company may owe within a year or less in order to accurately assess ... Read Answer >>
  3. What types of future events are taking into account for contingent liability?

    Understand the concept of contingent liabilities, and learn about some of the most common types of contingent liabilities ... Read Answer >>
  4. What kinds of liabilities appear on the balance sheet?

    Learn what current and non-current liabilities are, the difference between the two, and examples of liabilities that a company ... Read Answer >>
  5. What are the official FASB guidelines regarding contingent liabilities

    Learn how the Financial Accounting Standards Board, or FASB, treats the recognition, estimation and disclosure of contingent ... Read Answer >>
  6. How do I calculate current liabilities in Excel?

    Learn what current liabilities are and examples of a company's current liabilities, and find out how to calculate total current ... Read Answer >>
Related Articles
  1. Investing

    Understanding Total Liabilities

    Total liabilities are the combined debts an individual or company owes.
  2. Small Business

    Understanding Limited Liability

    Limited liability is a legal concept that protects equity owners from personal losses due to their ownership interest in the company.
  3. Insurance

    Explaining Indemnity Insurance

    Indemnity insurance is an insurance policy that protects business owners and employees from losses due to failure to deliver expected services.
  4. Taxes

    What is a Tax Liability?

    Tax liability is the amount of money a person or entity owes to the government as the result of a taxable event.
  5. Investing

    Examples Of Asset/Liability Management

    In its simplest form, asset/liability management entails managing assets and cash inflows to satisfy various obligations; however, it's rarely that simple.
  6. Personal Finance

    How To Improve Net Worth By Decreasing Liabilities

    Here's an analysis of how to adjust liabilities and assets to improve net worth.
  7. Investing

    Current Liabilities

    Current Liabilities are company debts due within one year or one operating cycle, whichever is greater. An operating cycle is the time it takes a company to purchase inventory and convert it ...
  8. Financial Advisor

    What Kind of Insurance Do RIAs Need?

    Advisors spend a lot of time discussing insurance with clients but they also need to consider their own coverage needs as small-business owners
  9. Investing

    Explaining Noncurrent Liabilities

    Noncurrent liabilities are financial obligations a company owes a year or more into the future.
  10. Insurance

    Do You Need Casualty Insurance?

    Find out how different types of coverages can protect you and which policy is right for you.
RELATED TERMS
  1. Indemnity Insurance

    An insurance policy that aims to protect business owners and ...
  2. Liability

    Liabilities are defined as a company's legal debts or obligations ...
  3. Business Liability Insurance

    Insurance that protects a company and/or business owner in the ...
  4. Liability Insurance

    Any type of insurance policy that protects an individual or business ...
  5. Indemnity

    Indemnity is compensation for damages or loss. Indemnity in the ...
  6. Total Liabilities

    The aggregate of all debts an individual or company is liable ...
Hot Definitions
  1. Benchmark

    A standard against which the performance of a security, mutual fund or investment manager can be measured.
  2. Mobile Wallet

    Mobile wallet is a virtual wallet that stores payment card information on a mobile device.
  3. Leverage

    1. The use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment. ...
  4. Trumponomics

    Trumponomics is a term for the economic policies of President Donald Trump.
  5. Universal Health Care Coverage

    An organized healthcare system that provides healthcare benefits to all persons in a specified region. Many countries, such ...
  6. Davos World Economic Forum

    The annual meeting of the World Economic Forum hosted at Davos—a small ski town in Switzerland—in January each year is among ...
Trading Center