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Tuesday, April 15, 2014  
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Glossary of Insurance Terms

Printed with permission from the Insurance Institute of Canada.

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A B C D E F G H I J L M N O P Q R S T U V W


Lapse
Latent Defect
Lease
Legal Liability
Lessee
Lessor
Liability Insurance
Libel Insurance
Lien
Like, Kind and Quality (LKQ)
Limit of Liability
Livestock Insurance
Loss
Loss of Use Insurance
Loss Payable Clause

Lapse
An insurance policy which, having reached its expiry date, is not renewed or extended is said to have lapsed.

Latent Defect
A defect which is not apparent. A hidden defect.

Lease
A contract by which one party, called the lessor, conveys to another, called the lessee, real estate, equipment or facilities for a specified term and for a specified rent.

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Legal Liability
Liability imposed by law on individuals or corporations to pay for harm done to others. Such law may be the common law, statute law or customs which over a period of time have taken on the same status as law. Legal liability may also be assumed under the terms of a contract.

Lessee
One that holds real or personal property under a lease, e.g., a tenant of rented premises.

Lessor
One that conveys property by lease, e.g., a landlord of rented premises.

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Liability Insurance
Insurance which agrees to indemnify the insured for sums he may be required by law to pay to third parties as damages for bodily injury or damage to property.

Liability Limits
The maximum amount of insurance provided under a policy of liability insurance. There may be different limits for bodily injury and property damage, or, more commonly, a single amount for all claims for bodily injury or property damage arising from one accident or occurrence.

Policies providing cover for claims arising from products manufactured by the insured or arising from his completed operations generally contain a further "aggregate limit" applicable to these, imposing a maximum for all claims occurring during the course of a single year.

Claims handling and adjusting expenses, costs of legal defense and prejudgment interest are normally payable in addition to the liability limits stated in the policy.

Libel Insurance
Insurance against claims arising from alleged libel, slander, defamation of character, etc. Principally written for the protection of those engaged in the publishing or advertising fields, as well as TV or radio broadcasters. Also provided as an extension to a liability policy as part of "personal injury" cover, which also includes false arrest, malicious prosecution and wrongful eviction.

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Lien
A charge upon real or personal property as security for some debt or duty. Also, the security interest created by a mortgage. The conditions of an insurance policy require the disclosure to the insurer of any existing lien on the insured property.

Like Kind and Quality (LKQ)
Refers to replacement of damaged, destroyed or lost property with used property of similar type and condition.

Limit of Liability
The maximum amount, as stated in the policy, which an insurer is bound to pay in case of a loss. See also Liability Limits.

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Livestock Insurance
Insurance against loss (death) of horses, cattle, hogs, sheep, dogs, etc. owned by the insured. The cover can be on an all risk or a specified perils basis and includes loss by theft. The insurance is usually written by specialist livestock insurers.

Loss
A word often used in place of the word "claim." It refers to the amount an insurer must pay because one of the possibilities of loss insured against under a policy, has happened.

Loss of Use Insurance
Cover against expenses incurred as a result of damage to the property insured resulting in the need to replace the property on a temporary basis. In automobile insurance this might refer to the cost of a rental car while the insured vehicle is under repair as the result of an accident. In a homeowner's policy it might refer to additional living expense when the insured premises are rendered uninhabitable by an insured peril.

Loss Payable Clause
A policy clause providing, at the direction of the insured, that in the event of a loss, payment shall be made to an interested party other than the insured, e.g., a mortgagee.

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