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LANDLORDS PROTECTIVE LIABILITY

When an owner leases, under a written lease, at least 90% of the area of a building to another who assumes full control (except repair or maintenance for the preservation of the premises), the landlord may protect his interest under a "Landlords Protective Policy" at 50% of the rates otherwise applicable under the regular OLT form.

LAPSE

The voiding of an insurance policy because of non-payment of a renewal premium.

LARCENY

The legal term referring to the wrongful appropriation of another’s property regardless of the method used. See also Burglary, Robbery, Theft, Embezzlement and Conversion.

LARGE NUMBERS

See Law of Large Numbers.

LASER PRINTER

See Printer.

LAST CLEAR CHANCE, LAW OF

Under Contributory (see) Negligence, wherein the injured party must show himself completely free of any fault, there is a concept known as "Last Clear Chance" when the defendant is considered liable if it can be proven that he had a "last clear chance" to avoid the accident. Since the doctrine of contributory negligence is now for all practical purposes ignored, or at least modified, and the new No-Fault laws are substituting Comparative Negligence for Contributory Negligence, the question of ‘Last Clear Chance' has become largely academic.

LATENT DEFECT

An intrinsic defect which is not apparent in a product, and which may later make itself known with perhaps dire results. A weakness, for example, which develops in the hardening process in the fabrication of a steel drive shaft may cause the entire shaft to break under heavy strain or prolonged use.

LAW OF LARGE NUMBERS

The theory that the occurrence of events resulting in loss is the end product of pure chance, and not of the willful or deliberate action (or lack of action) by any individual or group of individuals. The larger the number of risks or exposures, the more accurate the estimate of the occurrence of such events. (See also Actuary, Insurance and Probability, Theory Of.)

LEASEHOLD INTEREST INSURANCE

A "Time Element" type of protection which indemnifies the lessee (tenant) in the event his lease is cancelled either by a clause in the lease which automatically terminates the lease when the property is damaged, making the premises untenable (a very common, if not universal provision in leases), or by an ordinance or statute of condemnation. Such termination would require the tenant to move to other quarters, most likely at an increased rental. The difference in the new rental and the old is made up for by this type of insurance.

LEDGER-LINE RECORD

Agency copy of the original invoice, usually ontaining space for premium payments, commissions to sub-agents, etc.

LEGAL LABILITY

See Liability.

LESSEE, LESSOR

A Lessor (Landlord) grants a lease of occupancy (written permission to occupy) to a Lessee (Tenant).

LESSOR’S RISK ONLY

An Owners’ Landlords’ and Tenants’ Liability classification covering buildings or premises--bank, mercantile, manufacturing or office--not occupied by the insured (owner). Form is based on the assumption that the insured is not responsible for the care and maintenance of such buildings, and carries a lower rate than would otherwise apply.

LETTER OF TRANSMITTAL

A letter or other communication (form, etc.) which accompanies a document or other papers, describing such in detail, copy of which letter serves as evidence that such material was transferred to another party or parties. See also Bordereau.

LETTER, BROKER OR AGENT OF RECORD

See Broker (or Agent) of Record.

LIABILITY

Noun. The state or condition of being exposed, as above.

LIABILITY INSURANCE

Insurance under the terms of which the company agrees to pay a third party for bodily injury or property damage on behalf of the insured who may be held legally liable because of negligence. Legal Liability is that which is imposed by law; Assumed or Contractual Liability is that which is assumed by agreement. (See Assumed Liability, Contractual Liability, Contractor’s Protective Liability and miscellaneous other types of liability insurance discussed throughout.)

LIABILITY LIMIT(S)

See Limits of Liability.

LIABLE

Adjective. Simply stated, being obliged or held responsible for penalty, expense or burden, either imposed by law or assumed by agreement or contract.

LIBEL

The defaming of another by written or otherwise published word. Slander is also defamation, but by word of mouth (orally; spoken.) Both terms are subject to interpretation under law, but, generally speaking, in either case malicious intent must be shown. Relatively recent court decisions have in some instances denied the right of redress to well known public figures. Strangely enough, it has not always been necessary to prove that the charges themselves are false. In Ocean Marine, "Libel" means to bring suit against a ship and/or its cargo.

LIBERALIZATION CLAUSE

A clause attached to some policies (Homeowners, for example) which provides that if, during the term of the policy, any endorsements are authorized, or filings or regulations are made which would broaden or extend the coverage afforded without additional charge, such broadenings or extensions automatically apply to the policy in force without the attachment of the pertinent endorsement(s). This eliminates the need to issue thousands of endorsements to existing policies when a broadening provision is adopted. Conversely, filings or regulations made after the policy is in force which would restrict or otherwise limit coverage originally offorded may not be applied to such policy during its term. There is an exception to this rule, however, where subsequent premium payments on a policy written on a (see) Deferred Premium Plan may be subject to increase in rate or premium in effect at the due date of such subsequent installment(s). By the same token, a decrease in rate or premium would also be reflected in the subsequent installment(s).

LICENSEE

1) One who is granted the right to do something by someone in authority. 2) Similar to a (see) In v/tee, but who is on or in premises for personal or social reasons (rather than business), where the obligation of the owner or lessee with regard to care is of a somewhat lesser degree than in the case of an "lnvitee." (See also Invitee, Trespasser and Guest Laws.)

LIEN

A legal claim against real or personal property which guarantees satisfaction of some obligation (usually monetary). A Mechanic’s Lien is a lien by a person who has done some kind of work (plumbing, electrical etc.) pertaining to the property and who has not yet been paid for the work. He files the lien to make sure the property cannot be sold or otherwise disposed of unless and until he has been paid for his labor and materials. (See also Encumbrance and Mortgage.)

LIGHT

Glazier’s term for a pane or plate of glass.

LIGHTNING

A charge of electricity generated by nature, as opposed to a short circuit which is caused by electrical current artificially generated.

LIMIT(S) OF LIABILITY

This term refers to the maximum amount(s) an insurance company is obliged to pay in the event of a loss.

In most policies covering for liability for Bodily Injury, two limits are provided: the first is the limit of liability for injury to any one person; the second (usually higher) is the limit of liability for bodily injury as a result of a single occurrence, regardless of the number of persons injured, and the first limit is contained in the second, and is not excess. (25/50 limits does not afford $75,000 protection, for example.)

Property Damage is written with one limit per occurrence, subject sometimes to "Aggregate Limit--see below.

When you hear the expression, "20-50 and 5," or a similar expression, the first two figures given refer to the Bodily Injury limits (in thousands) as described above; the third refers to the Property Damage limit, also in thousands.

In some types of policies (Malpractice, Product, Manufacturers’ & Contractors’ Liability, for example) there is also an Aggregate Limit of liability which is the maximum limit payable under the policy for losses paid during the policy period.

Some policies (e.g. "Special Auto") provide a Single Limit of liability for one occurrence for Bodily Injury and/or Property Damage. Single limits are becoming more common on Automobile Insurance Policies as of the printing of this publication.

LIMIT(S), INCREASED

See Basic Limits.

LIMITED COLLISION COVERAGE

A form of automobile physical damage insurance which covers only when the insured is free of fault.

LIMITED POLICY

Type of policy which specifically limits the kind(s) of losses covered. (See Broad Form and All-Risk.)

LINE

1) Any particular category or type of insurance.
2) All the different types of insurance written for any particular insured.
3) The dollar limit written for an insured on a particular risk.

LINE GUIDE (OR LIMIT OR SHEET)

A list issued as a guide for agents and underwriters specifying the maximum amounts of limits to which a company will commit itself on any one risk, risk classification and/or area.

LIQUID ASSETS

See Assets.

LIVING EXPENSES

See Additional Living Expenses.

LLOYD’S OF LONDON

A corporation organized to supervise a group of underwriters who underwrite nearly every kind of insurance risk. It was originally a group of shipping merchants who met regularly at Lloyd’s Coffee House in London and pooled their resources so as to be able to contribute their share to marine losses resulting from perils of the sea, piracy, fire, mutiny and other hazards to ship and cargo. Lloyd’s, now made up of syndicates of underwriters, will assume almost any insurance risk, tailoring their contracts to fit the needs of their insureds.

Lloyd’s of London has to this day never failed to honor a claim. A "non-admitted" market facility, Lloyd’s also does a considerable business in the reinsurance field. U.S. brokers and agents generally do not have direct access to Lloyd’s, but (depending on various state laws), may place business with their U.S. representatives for risks not acceptable in the domestic "voluntary" or "residual" market.

American Lloyd’s (no connection) operate in a similar fashion, but are managed by attorneys-in-fact who act for members who participate in a given percentage of each risk. Individual participating underwriters usually have an agreement which limits their liability for losses, and must make deposits with the organization from time to time as evidence of their financial responsibility.

LOADING

A flat charge or percentage added to the regular premium to provide for extra expenses or profits, or to compensate for special conditions or situations in a risk or class of risk. Most minimum fire premiums now contain a "loading" charge. A Civil Disorder Loading (usually ranging from 2%to 4% of the policy rate) is added to the Fire and Extended Coverage rate in many areas where chances of unusual damage may result from such disturbances. Often applies in Inland Marine insurance.

LOCAL AGENT

An agent whose function is described generally under the definition of "Agent." His operations are mostly local in nature, confined to his own towns, but he may write and service insurance anywhere in his state.

LONGSHOREMENS & HARBORWORKERS COMPENSATION ACT

A special federal compensation law similar to Worker’s Compensation, but covering maritime workers other than masters and members of the crews of vessels.

LOSS

A term loosely used. Generally speaking, it refers to 1) the amount for which an insurance company becomes liable if the event insured against occurs, or 2) the event itself. The word Loss is used in property insurance to refer to damage or injury sustained by the insured (the so-called "First Party" claim). In liability, the term refers to injury to others or damage to their property for which the insurance company is liable to pay on behalf of the insured (a 'Third Party’ claim). (See also Consequential Loss and Constructive Total Loss.)

LOSS CONSTANT

A surcharge applied to Worker’s Compensation Policies to off set the disproportionately higher loss ratio found in policies developing relatively smaller premiums. The Loss Constant charge varies with the classification, usually ranging from $5.00 to $20.00, and is waived when the premium exceeds $500. (See also Expense Constant.)

LOSS CONTROL

See Safety Engineer.

LOSS INFORMATION SERVICE

A service maintained by the National Board of Fire Underwriters which supplies insurance companies with the names of persons who have been suspected or convicted of arson, or who have in some way been connected with fires of suspicious origin.

LOSS OF CONSORTIUM

See Consortium, Loss of.

LOSS PAYABLE CLAUSE

A clause providing for payment of loss to someone other than the insured who has an insurable interest in the property involved. Generally used for property other than real estate. As a general rule, when a loss occurs, payment is made to the order of the insured and the Loss Payee.

LOSS PAYEE

See Loss Payable Clause.

LOSS PREVENTION SERVICE

As the term implies, this is work done by independent consulting organizations or by a department within an insurance company involving inspection of large risks with a view to eliminating conditions which might cause accidents or other types of losses.

LOSS RATIO

The relationship of losses in dollars to premiums in dollars, expresses in terms of percentage. Other comparisons are also referred to as "Loss Ratios," such as Earned Premiums to incurred Losses; Written Premiums to Paid Losses, etc. (See also Incurred Losses and Experience.)

LOSS REPORT

A report to the company describing a loss involving an insured. Should be made promptly, even if all details may not be immediately available. A report of loss by an insured to the agent is considered a report to the company. Many policies also require a report to the police (or "proper authority") within a time limit specified in terms of hours; others within a "reasonable time."

LOSS RESERVE

An estimate of the amount of money an insurance company expects it may have to pay for reported loss. This amount of money is set aside as a "reserve" as soon as possible after receipt of the loss report.

LOST INSTRUMENT BOND

When stock certificates, bonds, insurance policies, government checks, certificates of indebtedness or of deposits, etc. are lost, the issuer will issue a duplicate when the owner can guarantee the issuer against loss in the event that the issuer may mistakenly honor the lost instrument and pay the bearer into whose hands the document may fall. A Lost Instrument Bond supplies this guarantee to the issuer. (See Bond, Instrument.)

LOST POLICY RELEASE (OR RECEIPT)

A document which, when signed by the insured (and, when named in the policy, the mortgagee), legally effects the cancellation of a policy in the event it cannot be located. (See also Cancellation.)