Dictionary of Insurance Terms -L-

-L-

• Labor-Management
  Relations Act of 1947 (Taft-Hartley Act): This law controls conditions
  under which an employer may pay any money to a representative of employees.

• 
  Lapse: The termination or discontinuance of
  an insurance policy due to non-payment of a premium.
• 
  Lapsed Policy: A policy terminated for
  non-payment of premiums. The term is sometimes limited to a termination
  occurring before the policy has a cash or other surrender value.
• 
  Larceny-theft: The unlawful taking,
  carrying, leading or riding away of another person’s property.
• 
  Last Clear Chance Rule: Statutory
  modification of the contributory negligence law allowing the claimant endangered
  by his or her own negligence to recover damages from a defendant if the
  defendant has a last clear chance to avoid the accident but fails to do
  so.
• 
  Law of Large Numbers: Concept
  that the greater the number of exposures, the more closely will actual
  results approach the probable results expected from an infinite number
  of exposures.
• 
  Legal Reserve: The minimum reserve which
  a company must keep to meet future claims and obligations as they are calculated
  under the state insurance code.
• 
  Level Commission Scale: A commission
  scale providing for payment of commissions at the same rate every year
  the policy is in force.
• 
  Level Premium: A premium which remains
  unchanged throughout the life of a policy.
• 
  Liability: Any legally enforceable obligation.
• 
  Liability Insurance: Insurance
  covering the policyholder’s legal liability resulting from injuries to
  other persons or damage to their property.
• 
  Liability Insurance: Provides
  protection for the insured against loss arising out of legal liability
  to third parties.
• 
  Liability Limits: The stipulated
  sum or sums beyond which an insurance company is not liable to protect
  the insured.
• 
  Liability Without Fault: Principle
  on which workers compensation is based, holding the employer absolutely
  liable for occupational injuries or disease suffered by workers, regardless
  of who is at fault.
• 
  License and Permit Bond: Type
  of surety bond guaranteeing that the person bonded will comply with all
  laws and regulations that govern his or her activities.
• 
  Lifetime Disability Benefit:
  A benefit to help replace income lost by an insured person as long as he/she
  is totally disabled, even for a lifetime.
• 
  Lifetime Disability Benefit:
  Disability income payable for the life of the insured as long as he is
  totally disabled.
• 
  Limited Policy: A contract which covers
  only certain specified diseases or accidents.
• 
  Limited Policy: One that covers only
  specified accidents or sicknesses.
• 
  Liquidation: Dissolving a company by selling
  its assets for cash.
• 
  Liquor Liability Law: SeeDramshop
  Law.
• 
  Living Trust: A trust created while the
  creator of the trust is living. Also known as an inter vivos trust.
• 
  Loading: The amount that must be added to
  the pure premium for expenses, profit, and a margin for contingencies.

• Long-Term Disability
  Income Insurance: Insurance issued to an employer (group) or individual
  to provide a reasonable replacement of a portion of an employee’s earned
  income lost through serious and prolonged illness or injury during the
  normal work career. (See also Integration.)

• 
  Loss: The happening of the event for which insurance
  pays.
• 
  Loss Avoidance: A risk management technique
  whereby a situation or activity that may result in a loss for a firm is
  avoided or abandoned.
• 
  Loss control: any conscious action (or
  decision not to act) intended to reduce the frequency, severity, or unpredictability
  of accidental losses.
• 
  Loss Expense – Allocated:
  Handling expenses, such as legal or independent adjuster fees, paid by
  an insurance company in settling a claim which can be definitely charged
  to that particular claim.
• 
  Loss Expense – Unallocated:
  Salaries and other expenses incurred in connection with the operation of
  a claim department of an insurance carrier which cannot be charged to individual
  claims.
• 
  Loss Payable Clause: Means of
  protecting a mortgagee’s interest in property by directing the insurer
  to make a loss payment to the mortgagee in the event of a loss.
• 
  Loss Prevention: Any measure which
  reduces the probability or frequency of a particular loss but does not
  eliminate completely all possibility of that loss
• 
  Loss Ratio: The percent which losses bear
  to premiums for a given period.
• 
  Loss Ratio: The ratio of claims to premiums.
  It may be calculated in several different ways, using paid premiums or
  earned premiums, and using paid claims with or without changes in claim
  reserves and with or without changes in active life reserves.
• 
  Loss Reserve: The amount set up as the
  estimated cost of a claim. (See IBNR Reserve)