Glossary of Insurance Terms
Printed with permission from the Insurance Institute of Canada.
Please choose a letter to continue:
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.
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.
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.
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.
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.
