L
Lapse
- Termination of a policy because of failure to pay the premium.
Larceny
- The unlawful taking of personal property of another.
Latent
defect - A hidden flaw that will, in time, cause property damage
that is uninsurable. Such damage is uninsurable because the element
of chance is no longer present.
Law
of large numbers - An underlying principle of insurance; the larger
the number of participants in a given arrangement, the more accurate
the rate is to the exposure.
Leased
worker - A worker leased from another organization on a long-term
basis.
Leasehold
interest insurance - The insurable interest is that of a tenant
who has some years remaining under a favorable lease that is subject
to termination upon significant damage to the leased property.
Legal
liability - Liability imposed by law; this includes liability based
on negligence, strict liability, or contractual liability.
Libel
- Written defamation of another’s reputation.
Liberalization
clause - A feature of property policies that promises that any future
change in the company’s form that would broaden coverage with no change
in premium will automatically apply under the policy currently in force.
License
and permit bonds - Suretyship guaranteeing that the principal will
abide by the rules and obligations imposed by licensing laws or ordinances.
For example, an electrician may have to post such a bond guaranteeing
compliance with building codes before being licensed by a municipality.
Limited
partnership - A form of partnership that consists of one or more
general partners, who actively engage in the business, and one of more
special partners, who are not liable for the debts of the partnership
beyond their initial financial contribution. Commercial insurance policies
usually differentiate in the "Who Is Insured" section between
corporations, partnerships, and other business models. Therefore, the
type of model being insured is important.
Liquor
liability insurance - Liability coverage for owners and operators
of establishments selling or serving alcoholic beverages. Litigation
bonds, see Judicial bonds.
Livery
use - An exclusion in automobile liability policies applying to
the use of autos to carry persons for hire as in a taxi service. A share-the-ride
car pool is not "livery use."
Livestock
insurance - Life insurance on livestock covering death by named
perils.
Lloyd’s
of London - An association of individuals, called "names,"
or groups of individuals who write insurance for their own accounts.
Lloyd’s had its be-ginning in 17th century London in Edward
Lloyd’s coffee house.
Loading
and unloading exclusion - A feature of commercial general liability
(CGL) policies intended to separate that coverage from the automobile
exposure. The CGL coverage ends at the point where an item is picked
up for loading onto an auto and resumes at the point where the item
is deposited upon unloading.
Long
tail - Refers to liability under policies written on an occurrence
basis. Claims stemming from injury or damage occurring years earlier
can be presented for coverage long after the policy has expired. Contrast
with Claims-made.
Longshore
and Harbor Worker’s Act - A Federal law that specifies compensation
amounts for injured longshore and harbor workers. Formerly referred
to as the Longshoremen’s and Harbor Workers Act.
Loss
- An unintentional decline or disappearance in value arising from an
event.
Loss
adjustment expenses - Payments by an insurer for the investigation
and settling of claims. They include the cost of defending a lawsuit
in court.
Loss
assessment coverage - Insurance responding to property or liability
loss of a property owners association that are not covered by the association’s
master policy.
Loss
control - Actions to reduce the frequency or severity of losses.
Installing locks, burglar or fire alarms and sprinkler systems are loss
control techniques.
Loss
costs - Loss data that has been modified by insurance advisory organizations
by necessary loss development, trending, and credibility processes in
order to arrive at the statistical cost of losses to be used in establishing
a premium rate.
Loss
development - An actuarial method to detect and correct for consistent
errors in estimating the amount of future loss payments or the procedure
for adjusting incurred losses to reflect their future development and
ultimate value. Loss development factors are developed actuarially and
applied to cur-rent losses in order to predict what the ultimate cost
of losses will be when the claims are closed.
Loss
expectancy - The underwriter’s calculation of probable maximum loss.
Loss
experience - What the loss history has been on a particular line
or book of business.
Loss
exposure - A set of circumstances presenting the possibility of
loss, whether or not the loss actually occurs.
Loss
frequency - How often a loss occurs over a given space of time.
Loss
limit - Commonly used in financial institution bonds, a loss limit
is the aggregate amount that will be paid out under the coverage during
the policy term. Loss limits also may be used when insuring large property
risks where the exposures are spread out geographically. In this type
of situation, it is unlikely that all property would be damaged by a
single occurrence. Therefore, the amount of insurance may be set at
a "loss limit" per each covered occurrence.
Loss
of use insurance - See Additional living expense insurance.
Loss
payable clause - A property policy provision that, at the request
of the named insured, stipulates that claims tied to losses of certain
property will be paid to both the named insured and the party named
in the subject clause.
Loss
prevention - Refers to engineering or inspection activities carried
out to prevent losses in the workplace.
Loss
ratio - The ratio of incurred losses including loss adjustment expenses
to earned premiums.
Loss
payout pattern - Losses often are paid over a period of years, especially
in casualty lines of insurance. The payout pattern illustrates the way
that claims are paid out from the time they are filed until they are
closed.
Loss
trending - A method to modify developed losses for changes that
will occur in the future. Trend factors are used by rate makers to adjust
past losses to more accurately reflect the loss experience expected
to develop while the rates are being used.
Loss
triangle - Used to show how losses develop, a loss triangle is a
chart that lists losses by line and by year. It shows the value of each
set of annual losses at the end of subsequent 12-month periods.
Lost
policy release - A means whereby an insured may cancel a policy
by signing a statement to the effect that, since his or her policy has
been lost, he cannot return it to the insurer to effect cancellation,
but still wishes to cancel the policy
