We hope that our extensive glossary of common (and some not-so-common)
insurance terms and phrases proves helpful to you! Simply start
below by choosing the first letter of the word or phrase you want to
learn more about.
A - B - C - D - E - F - G - H - I - J - K - L - M
N - O - P - Q - R - S - T - U - V - W
L-SHARE VARIABLE ANNUITIES - A form of variable
annuity contract usually with short surrender periods and higher
mortality and expense risk charges.
LADDERING - A technique that consists of staggering the maturity
dates and the mix of different types of bonds.
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.
LIABILITY INSURANCE - Insurance for what the policyholder
is legally obligated to pay because of bodily injury or property damage caused
to another person.
LIFE INSURANCE
- See Ordinary
life insurance; Term
Life insurance; Variable life
insurance; Whole life
insurance
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LIMITS - Maximum amount of insurance that can be paid for
a covered loss.
LINE - Type or kind of insurance, such as personal lines.
LIQUIDATION
- Enables state insurance departments as liquidator or their 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.
LIQUIDITY - The ability and speed with which a security can
be converted into cash.
LIQUOR LIABILITY - Coverage for bodily injury or property
damage caused by an intoxicated person who was served liquor by the policyholder.
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.
LLOYDS - 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.
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hometown.
LOSS - 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 COSTS - 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.
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.
LOSS RATIO - Percentage of each premium dollar
an insurer spends on claims.
LOSS RESERVES - The company’s best estimate of what
it will pay for claims, which is periodically readjusted. They represent a liability
on the insurer’s balance sheet. |
