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. What Are Some Examples of Current Liabilities?

    Look at some common examples of current liabilities a company may owe within a year or less in order to accurately assess ... Read Answer >>
  2. 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 >>
  3. On which financial statements does a company report its long-term debt?

    Discover which financial statements are used to report a company’s long-term debt, as well as how a company uses debt to ... Read Answer >>
  4. What are some examples of a deferred tax liability?

    Learn why deferred tax liability exists, with specific examples that illustrate how it arises as a result of temporary differences. Read Answer >>
Related Articles
  1. 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.
  2. Managing Wealth

    Protect Your Assets from Liability in Illinois

    Asset protection is a fundamental part of risk management. Use these tips to protect your assets.
  3. Small Business

    What is Unlimited Liability?

    Unlimited liability means that the owners of a business are liable for the entire amount of debt and obligations of that business.
  4. Investing

    How to Analyze a Company's Financial Position

    Find out how to calculate important ratios and compare them to market value.
  5. Personal Finance

    Common Liabilities That Hurt Your Net Worth

    Every penny that you keep out of the liability side of the net worth equation essentially ends up on the asset side.
  6. Managing Wealth

    Asset Protection for High Net Worth Individuals

    OK, you've made it. Here's how to hang onto it.
  7. Small Business

    Creating a Risk Management Plan for Your Small Business

    Learn how a complete risk management plan can minimize or eliminate your financial exposure through insurance and prevention solutions.
  8. Insights

    Limited Liability Partnership (LLP): The Basics

    Limited liability partnerships (LLPs) are a flexible, legal and tax entity that allows partners to benefit from economies of scale while also reducing their liability.
  9. Taxes

    Deferred Tax Liability

    Deferred tax liability is a tax that has been assessed or is due for the current period, but has not yet been paid. The deferral arises because of timing differences between the accrual of the ...
RELATED TERMS
  1. Indemnity Insurance

    Indemnity insurance is an agreement whereby one party guarantees ...
  2. Liability

    A liability is defined as a company's legal financial debts or ...
  3. Business Liability Insurance

    Business liability insurance protects a company and/or business ...
  4. Water Damage Legal Liability Insurance

    Water damage legal liability insurance provides financial protection ...
  5. Other Long-Term Liabilities

    Other long-term liabilities are a balance sheet item that lumps ...
  6. Adjusted Liabilities

    Adjusted liabilities are used in the insurance industry to show ...
Hot Definitions
  1. Portfolio

    A portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, also their mutual, exchange-traded ...
  2. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  3. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  4. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
  5. Current Assets

    Current assets is a balance sheet item that represents the value of all assets that can reasonably expected to be converted ...
  6. Volatility

    Volatility measures how much the price of a security, derivative, or index fluctuates.
Trading Center