A life or health insurance policy terminated as a result of non payment of a premium before the end of the grace period.
Law of Large Numbers:
The theory of probability on which the business of insurance is based. Simply put, this mathematical premise says that the larger the group of units insured, such as sport-utility vehicles, the more accurate the predictions of loss will be.
Legal Expense Insurance:
Insurance to reimburse policyholders for legal fees incurred for defense from lawsuits involving areas of civil law not covered by standard liability insurance. Examples include: discrimination, wrongful discharge, contract disputes and patent disputes.
Level Premium Life Insurance:
Insurance for which the cost is distributed evenly over the period during which premiums are paid. The premium remains the same from year to year and is more than the actual cost of protection in the earlier years of the policy and less than the actual cost in the later years. The excess paid in the early years builds up a reserve which helps meet the costs in later years.
An insurance company’s liabilities consist of its immediate or contingent policy obligations and unpaid claims, as well as the usual obligations arising out of doing business such as taxes, payroll, etc.
Provides protection for the insured against loss arising out of his/her legal liability to third parties.
The stipulated sum or sums beyond which an insurance company is not liable to protect the insured.
License—Agent or Broker:
Certification issued by a state’s department of insurance that an individual is qualified to solicit insurance applications in the state for the period covered.
Certification issued by a state’s department of insurance that an insurance company is qualified to do business in the state.
The maximum amount of benefits that an insurer agrees to pay in the event of a loss.
A type or kind of insurance.
Enables the state insurance department as liquidator or its appointed deputy to wind up the insurance company’s affairs by selling its assets and settling claims upon those assets. After receiving the liquidation order, the liquidator notifies insurance departments in other states and state guaranty funds of the liquidation proceedings. Such insurance company liquidations are not subject to the Federal Bankruptcy Code but to each state’s liquidation statutes.
The ability and speed with which a security can be converted into cash.
Coverage for bodily injury or property damage caused by an intoxicated person who was served liquor by the policyholder.
The process of a lawsuit.
Lloyd’s of London:
A marketplace where underwriting syndicates, or mini-insurers, gather to sell insurance policies and reinsurance. Each syndicate is managed by an underwriter who decides whether or not to accept the risk. The Lloyd’s market is a major player in the international reinsurance market as well as a primary market for marine insurance and large risks. Originally, Lloyd’s was a London coffee house in the 1600s patronized by shipowners who insured each other’s hulls and cargoes. As Lloyd’s developed, wealthy individuals, called “Names,” placed their personal assets behind insurance risks as a business venture. Increasingly since the 1990s, most of the capital comes from corporations.
Corporation formed to market services of a group of underwriters. Does not issue insurance policies or provide insurance protection. Insurance is written by individual underwriters, with each assuming a part of every risk. Has no connection to Lloyd’s of London, and is found primarily in Texas.
Long-term Care Insurance:
Coverage that, under specified conditions, provides skilled nursing, intermediate care, or custodial care for a patient (generally over age 65) in a nursing facility or his or her residence following an injury.
A reduction in the quality or value of a property, or a legal liability.
Loss Adjustment Expenses:
The sum insurers pay for investigating and settling insurance claims, including the cost of defending a lawsuit in court.
Loss Control Representative:
Insurance company employees, also called safety engineers, that perform loss control surveys or inspections, and prepare written loss control reports that outline their findings.
Loss Control Service:
Engineering or inspection service which assists the insured in reducing its exposure to loss.
The portion of an insurance rate used to cover claims and the costs of adjusting claims. Insurance companies typically determine their rates by estimating their future loss costs and adding a provision for expenses, profit, and contingencies.
Salaries and other expenses incurred in connection with the operation of a claims department of a property and liability insurance carrier which cannot be charged to individual claims.
The possibility that a loss may occur.
Loss of Use:
A provision in homeowners and renters insurance policies that reimburses policyholders for any extra living expenses due to having to live elsewhere while their home is being restored following a disaster.
In property and liability insurance, the percent that losses bear to premiums for a given period.
The estimated liability on an insurer’s balance sheet for unpaid insurance claims or losses that have occurred as of a given reporting date. On an individual claim, the loss reserve is the estimate of what will ultimately be paid out on that case.