Definition - What does Liability mean?
Liability is a responsibility or obligation that a party has or owes to another. In the context insurance, parties can be held "liable" for things such as injuries occurring to others, malpractice, negligence, and several other things. Liability insurance exists to protect people or companies from losses associated with liabilities that can occur as the result of lawsuits.
Insuranceopedia explains Liability
Many companies can be at a high risk for being liable for injuries. This is because companies often have buildings or premises where many customers come to shop. If customers get injured while on company property, then the company can be held responsible. For example, if a company employee accidentally forgets to dry an area of a floor that he or she just mopped and a customer slips and breaks a leg on that area as a result, then the company could be held liable for the injury. Liability insurance can protect against such losses.