Whether the other party is legally responsible for the injury. Liability is decided before the value of the claim is.
Liability is the question of who is legally responsible for the injury. In a motor accident it is usually the driver at fault, answered for by the CTP insurer. In a public liability claim it is the occupier or another party who failed to take reasonable care. In a workers compensation claim the statutory stage does not require fault at all, but a common law claim does.
An insurer can accept liability, deny it, or accept it in part. Where liability is shared the compensation is reduced for contributory negligence.