What is the definition of Contingent Liability?

A Contingent Liability refers to the liability a business (a partnership or corporation) may face because of accidents and other acts caused by other people besides the employees. The Contingent Liability is what the company is expected to pay in the event that there is damage. This is a way for the company to prepare and see whether it is able to meet their liability obligations.

However, contingent liability is not just limited to payments to be made in a lawsuit. You can also use this to compute for financial obligations for company events such as a product launch, or the launch of a new division. In this case, the contingent liability will be the amount the company needs to pay its vendors and suppliers for raw materials and other services.

• Competitive State Fund
• Excess and Surplus Lines
• Commission
• Businessowners Policy / BOP
• Employer’s Liability