Definition - What does Assumed Liability mean?
An assumed liability is a liability that one party takes on under the terms of a contract. In the context of insurance, insurance policies that protect against losses from an assumed liability are available.
Assumed liabilities are also known as contractual liabilities.
Insuranceopedia explains Assumed Liability
If a company takes on many assumed liabilities under the terms of a new contract, then it could be under great risk if it does not purchase assumed liability insurance. For example, if a construction company takes on the assumed liability of the safety of a government owned road while it is working on it, then it could be held liable for any injuries that occur on the road while it is closed and being worked on. So, in this circumstance, it would be up to the construction company to keep the area safe, and to purchase assumed liability insurance to make sure that it is covered in the event of an accident happening.
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