ANSWER: Liability is an obligation or debt of a business that comes from past transactions, services, or operations and are settled with the transfer of economic benefits such as money. *
Business Liability Meaning
Liability in business is the responsibility or consequences that must be upheld from acts or services during business operations. Anything a business does whether its from the employer, employee, or third parties that effect the business’ clients is consider a liability and may cost the business in the case of negligence or losses. Liability can also result from failure to perform duties or actions in the course of a business or from a breach of duty.
In the case of negligence or damage to a client, a business will need to settle the defenses and costs through transfers of economic benefits such as money, goods, or services. Insurance of business liability will protect the business from these events and cover the costs of defense and settlements.
It is important to assess your business’s exposure to liability claims and protect your business with liability insurance in the case of claims such as wrongful employee termination, accidents, discrimination, or injuries or damages to clients on business property, and other scenarios. Every business is different and will need different forms of business liability coverage to protect their finances and assets.
*This information is a guide only, it is not legal or financial advice. Always do due diligence to ensure you are not breaking the law.