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Landlords Protective Liability
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If an owner of a property leases the entire premises to others who assume full control, the chance of being held liable for accidents occurring on the premises is diminished. The owner can insure the liability as "landlords protective liability," at lesser rates than for the normal owners, landlords, and tenants form of policy. This type of policy is rarely requested or used since the advent of the commercial general liability and the use of additional insured endorsements.
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Laser Endorsement
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A type of endorsement that may be attached to the claims-made version of the commercial general liability policy (CGL) for the purpose of excluding specific accidents, products, work, or locations.
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Latent Defect
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A defect found in a product that is not readily visible or discernible at the time of manufacture and not discovered until later, usually when in use.
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Lay Up Warranty
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A provision in a polcy insuring a vessel, whereby the policy holder agrees that the vessel will not be in use. Also applicable to automobiles.
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Layering
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Risks that have high limits or high exposure to loss are often protected by purchasing policies to cover limits in layers. The first layer of coverage is called the primary layer and responds first to loss. When that limit has been exhausted, the second and subsequent layers respond. Because of the structure of layering, the second layer and above are normally much less expensive than the primary and, therefore, this method of protection can be cost effective.
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Lead Underwriter
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A concept or structure used by Lloyd's companies which signifies the underwriter whose name is the first to appear and the first to respond on a Lloyd's slip. Because the prestige of the lead underwriter may influence others to participate (or not participate), the lead underwriter must be reviewed carefully.
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Legal Liability
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Liability imposed by law, as opposed to liability arising from an agreement or contract.
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Lesion
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injury; hurt
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Lessee
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Person to whom a lease is granted.
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Letter of Credit
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1)A commitment made by an issuing bank or other party at the request of a customer to honor drafts or other demands for payment presented to the bank under the terms of the credit and, if the commitment is a documentary draft, upon presentation of the required documents of title.
2)In reinsurance, a commitment made by a bank to a reinsured which can be drawn upon to cover any of the reinsurer's liabilities to the reinsured under their reinsurance agreement.
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Liability
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1)An obligation imposed by law or equity.
2)Money owed or expected to be owed. In an insurance company financial statement, the two columns it contains are its "assets" (or the amounts it owns) and the "liabilities" (or the amount it owes or expects to owe). Liabilities generally are defined by state statute or insurance department regulation for use in the annual statement of an insurer. The term is also defined for special purposes by other regulatory officials, such as the Securities and Exchange Commission.
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Liability Insurance
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Protection which pays sums that an insured is legally obligated to pay, or that the insurer has agreed to pay, as damages to others as a result of the insured's negligence. May cover bodily injury to another or damage to property of another.
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Libel
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1)To publish defamatory statements about another. The general distinction between libel and slander is that the first must be in writing or similar permanent form, while the latter is oral. The distinction at law is not as simple.
2)In maritime law, the word for a legal
action directed against a ship.
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Lifetime Disability Benefit
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A disability benefit providing income payments to the insured as long as the insured is disabled.
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Lightening Clause
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A clause formerly attached to a fire insurance policy extending the coverage to include damage done by lightening. Since the fire policy now covers lightning damage, the term is of historical interest only.
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Limit or Limit of Liability
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According to the terms of a given policy, the most an insurer will pay for any one loss.
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Line Card
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1)When a risk does not appear on the Sanborn Map, fire insurance companies are accustomed to listing the details of it on a location card to determine if and when the company is offered another line on the same piece of property.
2)In an agent's office, the card on which all the insurance sold to one customer is listed.
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Lloyd's Broker
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A broker accredited to deal with underwriters at Lloyd's, London, the rules of which do not permit the placement of insurance other than through such a broker.
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Lloyd's Member
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Once an individual is able to show proof of a rather significant financial net worth and is willing to participate as a member by putting that net worth on the line as collateral, that individual must then be elected by the Lloyd's membership in order to become a member of Lloyd's of London. These persons are also known as "Lloyd's names." Individuals are insurers; the group is Lloyd's.
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Lloyd's Name
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Once an individual is able to show proof of a rather significant financial net worth and is willing to participate as a member by putting that net worth on the line as collateral, he/she must then be elected by the Lloyd's membership in order to become a member of Lloyd's of London. They are also known as "Lloyd's members." Individuals are insurers; the group is Lloyd's.
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Lloyd's of London
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A collection of individuals who assume policy obligations as the individual obligations of each. The formal name is Underwriters at Lloyd's, London. Also, Lloyd's of London is a service organization which provides a central market place and ancillary services (such as policywriting, accounting, inspections, and adjusting) for its underwriting members and its brokers.
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Lloyd's Underwriter
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Once an individual is able to show proof of a rather significant financial net worth and is willing to participate as a member by putting that net worth on the line as collateral, that individual must then be elected by the Lloyd's membership in order to become a member of Lloyd's of London. Those persons are also known as "Lloyds names" or "Lloyd's members." Individuals are insurers or underwriters; the group is Lloyd's. Lloyd's underwriters are responsible only for their own assumptions of risk. They are not obligated for any risk assumed by others even if in the same syndicate, on the same account, or otherwise a part of the Lloyd's organization.
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Long-Tail
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A colloquialism referring to the lengthy period of time between the occurence of an event giving rise to a third-party claim and the claim itself. While this lengthy period is common to all kinds of third-party claims, as opposed to direct damage claims, it is most pronounced in professional liability insurance written on an "occurrence" basis, as opposed to a "claims-made" basis.
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Long-Tail Liability
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Covered liability occurrences may take many years to fully develop into claims, be investigated, and settled. This development process is called long-tail. As a result, liability rates are not as responsive to losses, nor are they as credible as other lines of insurance.
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Loss Constant
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Used primarily in workers compensation insurance, a flat charge added to the premium of small risks to offset the higher loss ratios produced by such risks. Also used in some states in fire insurance premiums for low valued dwelling risks to offset the higher loss ratios they produce.
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Loss Control
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The steps and processes made by a risk to reduce, eliminate or control the frequency of loss from occurring and the severity of the loss once it has occurred.
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Loss Cost
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1)The ratio of actual (or "as if") reinsured losses to a ceding company's subject matter premium (either written or earned premium)for the same period. Used to analyze past experience and to predict future experience of a per-risk excess cover.
2)In order to reduce the allegations of rate-fixing and prevent anti-trust suits and litigation, many rating bureaus and rate organizations have now eliminated the development of rates. Instead, they are providing only base statistics called a loss cost, which is the precent of each exposure base for each classification that is directly attributed to the amount of loss experienced by that class. To the loss cost, each insurer must then add its own loading for expense, contingencies, profit, etc.
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Loss Experience
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The loss history for an account, a line of business, a book of business, or some other defining category. Loss experience may include the date of loss, type of loss, amount of loss, whether the loss is open or closed, and summary of the details of the loss.
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Loss Report
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A written statement made by an agent, an insured, a claimant, or a beneficiary containing details of the claim being made under an insurance policy.
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Loss Reserve
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An estimate of the amount an insurer expects to pay for reported and estimated claims. May include amounts for loss adjustment expenses.
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Lump Sum
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One method of payment of benefits, most often occurring in life insurance, where the beneficiary receives the entire face value or payout of the policy at once, rather than in installments, monthly income, or various other options.
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Services