Liability is a legal determination or finding of fault or financial responsibility that is enforceable by law (generally the courts and legal processes)—such as when a person is found liable or is found to have liability for certain claims made or losses suffered by another person or entity.

In the personal injury context, liability usually results from a person or entity (the defendant) owing another person or entity (the plaintiff) a certain duty or standard of care, and the person or entity who owes the duty or standard of care (the defendant) breaching the duty or standard of care, resulting in damages to the other person or entity (the plaintiff).

The term liability may be used to describe:

• insurance (liability insurance) that insures the insured against certain kinds legal liability defined in the insurance policy;

• a certain kind of request made by an insured to its insurer, asking the insurer to defend and indemnify the insured against a claim by another person or entity (a third party)—often referred to as a liability claim or a third-party liability claim;

• a debt or financial responsibility of a company or business that appears on its balance sheet.

In Minnesota, liability in the context of personal injury law involves establishing that a defendant had a duty of care towards the plaintiff, breached that duty, and caused damages as a result. This legal framework is consistent with general tort principles across the United States. When a party is found liable, they may be required to compensate the injured party for their losses. Liability insurance is a common way for individuals and businesses to protect themselves financially from potential legal claims. Such insurance policies cover various types of legal liabilities as defined within the policy terms. When an insured party faces a claim, they can make a liability claim to their insurer, seeking defense and indemnification against third-party claims. Additionally, in a business context, liabilities refer to financial obligations or debts of a company that are recorded on its balance sheet, representing the company's legal responsibilities to creditors or other entities.