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Limit or Limit of Liability
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According to the terms of a given policy, the most an insurer will pay for any one loss.
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Line Card
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1)When a risk does not appear on the Sanborn Map, fire insurance companies are accustomed to listing the details of it on a location card to determine if and when the company is offered another line on the same piece of property.
2)In an agent's office, the card on which all the insurance sold to one customer is listed.
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Lloyd's Broker
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A broker accredited to deal with underwriters at Lloyd's, London, the rules of which do not permit the placement of insurance other than through such a broker.
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Lloyd's Member
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Once an individual is able to show proof of a rather significant financial net worth and is willing to participate as a member by putting that net worth on the line as collateral, that individual must then be elected by the Lloyd's membership in order to become a member of Lloyd's of London. These persons are also known as "Lloyd's names." Individuals are insurers; the group is Lloyd's.
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Lloyd's Name
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Once an individual is able to show proof of a rather significant financial net worth and is willing to participate as a member by putting that net worth on the line as collateral, he/she must then be elected by the Lloyd's membership in order to become a member of Lloyd's of London. They are also known as "Lloyd's members." Individuals are insurers; the group is Lloyd's.
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Lloyd's of London
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A collection of individuals who assume policy obligations as the individual obligations of each. The formal name is Underwriters at Lloyd's, London. Also, Lloyd's of London is a service organization which provides a central market place and ancillary services (such as policywriting, accounting, inspections, and adjusting) for its underwriting members and its brokers.
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Lloyd's Underwriter
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Once an individual is able to show proof of a rather significant financial net worth and is willing to participate as a member by putting that net worth on the line as collateral, that individual must then be elected by the Lloyd's membership in order to become a member of Lloyd's of London. Those persons are also known as "Lloyds names" or "Lloyd's members." Individuals are insurers or underwriters; the group is Lloyd's. Lloyd's underwriters are responsible only for their own assumptions of risk. They are not obligated for any risk assumed by others even if in the same syndicate, on the same account, or otherwise a part of the Lloyd's organization.
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Long-Tail
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A colloquialism referring to the lengthy period of time between the occurence of an event giving rise to a third-party claim and the claim itself. While this lengthy period is common to all kinds of third-party claims, as opposed to direct damage claims, it is most pronounced in professional liability insurance written on an "occurrence" basis, as opposed to a "claims-made" basis.
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Long-Tail Liability
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Covered liability occurrences may take many years to fully develop into claims, be investigated, and settled. This development process is called long-tail. As a result, liability rates are not as responsive to losses, nor are they as credible as other lines of insurance.
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Loss Constant
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Used primarily in workers compensation insurance, a flat charge added to the premium of small risks to offset the higher loss ratios produced by such risks. Also used in some states in fire insurance premiums for low valued dwelling risks to offset the higher loss ratios they produce.
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Loss Control
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The steps and processes made by a risk to reduce, eliminate or control the frequency of loss from occurring and the severity of the loss once it has occurred.
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Loss Cost
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1)The ratio of actual (or "as if") reinsured losses to a ceding company's subject matter premium (either written or earned premium)for the same period. Used to analyze past experience and to predict future experience of a per-risk excess cover.
2)In order to reduce the allegations of rate-fixing and prevent anti-trust suits and litigation, many rating bureaus and rate organizations have now eliminated the development of rates. Instead, they are providing only base statistics called a loss cost, which is the precent of each exposure base for each classification that is directly attributed to the amount of loss experienced by that class. To the loss cost, each insurer must then add its own loading for expense, contingencies, profit, etc.
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Loss Experience
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The loss history for an account, a line of business, a book of business, or some other defining category. Loss experience may include the date of loss, type of loss, amount of loss, whether the loss is open or closed, and summary of the details of the loss.
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Loss Report
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A written statement made by an agent, an insured, a claimant, or a beneficiary containing details of the claim being made under an insurance policy.
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Loss Reserve
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An estimate of the amount an insurer expects to pay for reported and estimated claims. May include amounts for loss adjustment expenses.
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Lump Sum
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One method of payment of benefits, most often occurring in life insurance, where the beneficiary receives the entire face value or payout of the policy at once, rather than in installments, monthly income, or various other options.
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Malicious Mischief
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Intentional and willful vandalism and destruction of property. In most property policies, it is linked with the vandalism cause of loss.
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Malpractice
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Improper actions or failure to exercise proper skill by a professional or others involved with the care of the human body, such as a physician, dentist, blood bank, etc. Malpractice insurance is a form of liability coverage against such mistakes.
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Manual Rate
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A charge for a unit of insurance set forth in a manual of instructions.
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Marine Insurance
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One of major divisions of insurance (life, health, property, marine, casualty, surety), primarily written for property in transit. If by sea, "ocean" marine or "wet" marine; otherwise, "inland" marine.
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Marine Law
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Section of the federal or national court system which deals with matters pertaining to vessels, crew, and their cargoes navigating on interstate or international waters. Maritime procedures, precedents and rules are different in admiralty courts than in other courts. Also called admiralty court.
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Marine Perils
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The perils which are insured against in a policy of ocean marine insurance. The wording of the marine policy is the result of several hundred years of careful study, judicial interpretation and precedent, and thus such perils have maintained an exact definite meaning in marine insurance.
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Marine Syndicates
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Groups of insurance underwriters which act through a manager to insure certain ocean marine classes of business.
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Market Value Clause
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A clause in which the insurer agrees that the amount it will pay in the event of loss shall be the value of the destroyed merchandise "on the market", which is the amount which could have been realized by selling the merchandise. Obviously, this includes the seller's profit; therefore, the clause is used with caution to avoid the creation of a moral hazard.
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Master
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The commander of a commercial vessel. Popularly the "captain," but the term in admiralty law and marine insurance is "master."
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McCarran-Ferguson Act
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Enacted on March 9, 1945, a law by which Congress granted authority to the states to continue to tax and regulate the business of insurance (after the insurance business had been held by the Supreme Court to be commerce in a landmark case in 1944, and therefore, subject to federal regulation whenever subject to interstate regulation). The act provided further that the antitrust laws should not apply to the extent the business of insurance is regulated by the states, except for coercion, intimidation and boycott. Also known as Public Law 15 (79th Congress, 1945. McCarran-Ferguson Regulation Act: 15 U.S.C. 1011-15)
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Mean
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The average of the accumulation of data, statistics and their results for a given topic.
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Mechanics Permit
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A clause in a policy granting permission to employ workers, such as mechanics, in and around the risk, since their work may increase the exposure. Permission is usually automatically included for such repairs and alterations which are necessary for the maintenance of the premises.
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Minimum Premium
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The lowest flat or earned policy charge for which a policy will be issued or for which coverage will be provided.
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Misrepresentation
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Misleading the company as to material facts affecting a policy or the settlement of a loss, either by directly or indirectly lying. Misrepresentation as to material facts voids policies.
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Mistook
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A mistake.
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Mobile Equipment
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Vehicles not normally designed for use on public roads and not normally required to be licensed.
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Monoline Policy
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A policy that covers only one line of insurance.
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Monopolistic State Fund
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A state-controlled workers compensation plan which writes insurance on such risks within the state and prohibits private insurers from doing so.
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Moral Hazard
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A condition or characteristic by which an insured intends to profit from an insured loss.
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Morbidity Rate
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Rates that have been developed based on the accumulation of statistics and data and that are used to show the percentage or ratio of how often certain types of sickness or illness occur within a given period of time to the classification or a specific group of insureds.
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Morbidity Table
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A listing of data showing the accident or sickness rates of persons of each sex at each age.
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Multi-Line Insurance
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A package of coverages within one policy that provides for more than one line of insurance such as property and liability. Not the same as multi-peril which is a contract that insures more than one peril or cause of loss within the policy. For example, an "all-risk" property policy is multi-peril.
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Multiple Location Policy
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A policy covering real or personal property subject to a single common interest (owner, tenant, or one holding a financial interest or title) at a number of different locations. Such policies are rated under a special plan.
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Municipal Insurance
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Commercial Insurance programs designed specifically to cover cities, town, states, or other types of municipalities.
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Mysterious Disappearance
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The vanishing of insured property in an unexplained manner. Previously there were disputes under theft policies as to whether property mysteriously lost had or had not been stolen. To avoid contention, insurers stated in such policies that mysterious disappearance was presumed to be due to theft. Mere disappearance of property, such as an article dropped from a boat, is not covered, since the disappearance is not mysterious.
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Named Insured
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The person designated in the policy as the insured, as opposed to someone who may have an interest in a policy but who is not shown by name.
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Negative Film Insurance
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Pays a producer of commercial films the cost of reshooting should the film suffer damage in the course of production.
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Negligence
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The failure to exercise the care that an ordinary prudent person would exercise: either doing that which a prudent person would not do, or failing to do that which a prudent person would do.
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New For Old
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An expression in Marine Insurance which means that when repairs are made, new parts or equipment are supplied in place of old ones that have been lost or damaged. An insurance policy may stipulate that the difference between the old and new costs are either excluded or included in its coverage.
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New York Insurance Exchange
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A newly formed (1980) property-liability underwriting exchange patterned after the syndicate type of operation of Lloyd's of London. The chief differences between the Exchange and Lloyd's are that the New York Exchange permits corporate as well as individual members, and their liability is limited to the amount of funds invested.
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No-Fault Automobile Insurance
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Coverage designed to compensate victims of automobile accidents without the necessity of proving negligence on anyone's part. No-fault laws passed by different states vary greatly in their scope and application. Most provide that a victim's own insurance will allow a victim to sue in tort, once expenses or injuries have passed a stipulated threshold (monetary or otherwise).
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Nonadmitted Insurance
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Protection written by an insurer on a risk located in a state in which the insurer is not licensed. Such an insurer is referred to as a nonadmitted insurer.
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Nonadmitted Insurer
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If an insurer is not licensed to write insurance in a specific state, then the insurer is a nonadmitted insurer for that state.
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Noncancellable
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A provision in some policies (crop-hail insurance and ocean marine insurance) that neither policyholder nor insurer may terminate the contract during its term.
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Services