Listed Companies
Companies whose shares are listed for trading in Stock Exchanges. The respective Stock Exchange in which the shares are listed prescribes Regulations for these Companies regarding publication of their accounts and disclosure of various information and details. Hence the listed Companies may be said to be more transparent.
Losses discovered or claims made basis
The term, In relation to excess of loss reinsurance treaties, means that all losses discovered, reported or made during the period of the treaty irrespective of the inception date of the original policy or policies or of their occurrence. This type of cover is sometimes used when it is difficult to pinpoint an exact date of occurrence, e.g. Fidelity Guarantee Policies
Losses occurring basis
In relation to excess of loss reinsurance treaties, the cover provided under the arrangement being on losses occurring basis, meaning that all losses occurring during the period of the treaty irrespective of the inception date of the original policy or policies (issued by the reinsured to the original insured) are covered by the treaty.
L.C.R
"Largest Claims Reinsurances" is a method more suitable to Liability Reinsurances where a statistical survey of large losses is taken on last five years and a prescribed limit of largest loss is fixed so that reinsures are made liable to pay only those losses which cross that limit.
Label Clause
A clause significant to Marine Cargo Insurance. In respect of canned or similar type of goods which are labelled for product identification purposes, where such labels will be damaged by contact with water or other cargo, insurer’s liability will be restricted to the cost of re-packing and re-labelling only as per this clause.
Lag
The period that has elapsed between when claims actually occurred and when actually paid
Landed but Missing
Situation where an import or export cargo would be lost after landing at the destination port, because of theft, over issue or wrong carriage to some other place. In all such cases Port Trust Authorities would, after a search, issue a certificate known as Landed but Missing Certificate or C certificate.
Landing Remarks
Remarks made by the dock authorities in their record, showing marks & nos., weights, condition etc. of the goods landed. Insurers would require an extract of this record in respect of a claim for loss or damage to the insured cargo as an evidence for the stage at which the loss to cargo could have taken place.
Lapsed Policy
An insurance cover which has come to a close earlier to the original date of expiry as stated in the policy, because of non-payment of premium by the insured. As regards non-life insurance this would arise only in respect of Marine Hull policies or other policies issued for periods greater than one year where the facility of instalment premium payment is extended. When the insured fails to pay the instalment on or before the due date, the policy will lapse on the due date.
Larceny
The unlawful taking, carrying, leading or riding away of another person's property
Large Losses Information
Information on large losses is provided to reinsures for the purpose of reviewing the performance of a treaty, be it proportional treaty or excess of loss.
In relation to a proportional treaty, a loss is called a "large loss" when it exceeds the "Cash Loss Limit" provided in the treaty wordings.
In relation to an excess of loss reinsurance, a loss is called a "large loss" when it exceeds 50% of the underlying limit
Latent Defect
Term used to refer to any hidden flaw or defect in the structure of the ship or machinery which is not readily discoverable by a competent person using reasonable skill in an ordinary inspection. Any loss/damage caused by a latent defect is recoverable under a Marine Hull Insurance Policy which provides coverage as per I.T.C. (HULLS) or I.V.C. (HULLS)
Law of Large Numbers
Concept that the greater the number of exposures, the more closely will be, the actual results to the expected results and greater the credibility of predictions. This law forms the basis for arriving at the statistical expectation of loss based on which the insurance premium will be fixed for different risks.
Lawful Adventure
An implied warranty in respect of marine insurance contracts to the effect that the adventure must be legal.
Lay-up Warranty
The hull policies covering minor vessels such as fishing vessels and sailing vessels carry a "Lay-up Warranty" providing that the insured vessel be laid up out of commission during a specified period viz. monsoon or winter months. The vessels may be laid up afloat, or on mud or the "hard".
Layout Plan
A representation of the shape of horizontal section of a building. The shape of the building at the ground floor is always taken and by adding further details, the plan is built-up so as to incorporate all features of all storeys and also of the roof. Plans contain clear and concise form of important matters which cannot be covered by an inspection report.
Lay-Up Returns
- In Marine Hull Insurance, Scale of Premium Refund agreed by the International Marine Insurance Market when the insured vessel should be laid up during the period of insurance. As the risk to the insurer during lay-up period would be very less when compared to the risk during navigation of the vessel, return of premium is allowed by the insurer for the laid-up period. This return of premium is subject to certain conditions imposed by the insurer.
-Motor Insurance, if vehicle is laid up in the garage, risks covered under a Motor Comprehensive Insurance Policy are restricted to fire, burglary and theft. Hence part of premium becomes refundable as per the provisions in the All India Motor Tariff.
Lead Insurer
The insurer among the co-insurers in respect of any risk jointly insured by them, who has greater share than others. Leader or the lead insurer will deal with the insured on all matters connected with the insurance coverage including full premium collection, document issue, other clients' servicing matters including settlement of claim for the full assessed loss etc. It is customary for all co-insurers to issue to the leader letter of authority to facilitate the leader to carry out all the above functions on their behalf which would be binding on them. Normally Ex-gratia settlement of claims do not come under this arrangement. Periodical settlements will be effected as between the leader and the co-insurers in connection with release of co-insurer's share of premium and collection of their share of losses.
Leader/Leading Reinsurer
Generally an Excess of Loss Reinsurance Treaty Terms are negotiated with a leader who quotes rates and other terms and supports with a lead share. A reputable leader's lead makes it easy to complete placement with good securities. Generally other reinsurers agree to follow the leader.
On a proportional treaty generally there is no leader but there may be a leading reinsurer with a large share.
Leakage from Automatic Sprinkler Installations
Accidental discharge or leakage of water from an automatic sprinkler installation arising out of damage to the sprinkler head by impact from some object or heat from some source other than fire causing sprinkler head to operate. Loss/damage to an insured property due to such leakage of water is covered under the standard fire and special perils policy.
Lease
Contract whereby the owner of some fixed assets like building, equipment, furniture etc. allows the usage by the contracting party of such fixed assets for a specified period of time in consideration of certain payment of amount in the form of rent by the said contracting party. The owner of the leased property is called the Lessor and the user the Lessee.
Legal Liability
Financial Liability towards third parties imposed under Civil Law.
Legal Liability Insurance Policy
Insurance Coverage to provide indemnity to the insured in respect of financial consequences of legal liability. Wherever liability arises under Civil Law, compensation (damages) becomes payable. Besides there may be legal costs awarded against the insured and also legal costs of defence of the claim incurred which are also reimbursed under the policy.
Legal Opinion
Opinion given by a lawyer in respect of an issue, describing what is legal or lawful.
Legality of the contract
One of the essential elements for a contract to be legally valid. Applicable to insurance contracts also. The subject matter of the contract must be legal.
Lender
Individual or firm that extends money to a borrower with an undertaking by the latter that such money shall be repaid, usually with interest. Lenders extending loans against assets, whether moveable or immovable have an insurable interest on such assets.
Lessee
A person to whom a lease is granted. A tenant under a lease
Letter of Credit
A document authorising payment of an agreed sum to a named person at the risk of the issuer. If expressed as irrecoverable the authority cannot be withdrawn.
Letter of Indemnity
Where original policy has been lost or misplaced by the claimant, a letter of indemnity is obtained from him by the insurer to the effect that in case, subsequently, some other person presents his claim on the insurer on the support of the original policy, he will reimburse the claim amount paid to him and also hold the insurer harmless for effecting settlement with him without production of the original policy. This is relevant only in respect a Marine Policy in view of its freely assignable nature.
Letter of Transfer (G.A)
In relation to General Average, refers to a letter obtained from the insured by the insurer after paying on behalf of the insured the general average deposit due to be paid by the insured in connection with a general average. On the strength of this letter the insurer can receive from the ship-owner any excess amount of deposit over the actual contribution amount.
Liability
Any legally enforceable obligation.
Liability Insurance
Insurance designed to protect the policyholder against financial loss due to liability resulting from injuries to other persons (Third Party) or damage to their property.
Liability Limits
The sum or sums stipulated in an insurance contract up to which an insurance company is liable to meet the claims made by the insured.
Liability of carrier (Carriage by Sea)
Under the contract of affreightment, the carrier is obliged to supply a vessel which is both sea-worthy and cargo-worthy. Besides providing a competent crew to man the ship, he must carry, care for and deliver the goods at destination in the same good order and condition in which they were delivered to him. If on account of failure on the part of the carrier to discharge his duties, the cargo suffers any loss or damage, he is liable to make good the loss to the cargo owner. The ship owner's liability towards cargo is limited by statute. The carriers' liability to cargo is insured through P & I Clubs and not in the ordinary marine insurance market.
License
Legal authority given to a company, agent, broker or a consultant to transact insurance business within the framework of applicable laws and/or acts and/or regulations that are in force.
License Fee
Sum paid by an insurance company or other firms or individuals as fixed by the Regulatory Authority for transacting business as per the authority granted by the License.
Lien
A legal right which one possesses over the property of another until the latter has satisfied a liability towards the former. (Ex. A carrier has a lien on the cargo carried by him until the freight for carriage has been paid)
Lift (Third Party Liability) Insurance
An Insurance Policy designed for owners of passenger lifts in buildings to take of their liabilities arising out of the use and operation of the lifts. Policy provides indemnity for the legal liability of the insured for payment of compensation to third parties for loss of life or bodily injury or for the damage to the third party property. Legal expenses incurred by the insured with the consent of the insurer for defending any legal action against the former by such third parties will also be payable under the policy. The policy will contain two limits one for any one accident and another for all the claims during the period of the policy which will represent the insurer's maximum liability.
Light Motor Vehicle (LMV)
A transport vehicle or omnibus, the gross vehicle weight (GVW) of either of which or a motor car or a tractor or a toad roller, the unladen weight of any of which does not exceed 7,500 Kgs.
Lightning
A flash of light in the sky caused by the discharge of atmospheric electricity from one cloud to another or between the cloud and the earth. Lightning may cause crevices in a building or fire damages. Lightning is a peril covered under the term "Fire" in relation to the Standard Fire and Special Perils Policy.
Limit for Any One Loss
Refers to amount of maximum liability of the insurer under the policy for any one loss or series of losses arising out of one event
Limit of Liability
This is the monetary limit to which the insurer/ reinsurer is liable for any one risk. When It relates to reinsurance it is expressed either on a sum insured basis or on P.M.L.(Probable Maximum Loss) basis.
Limit of Loss with Reinstatement Provision
In an Excess of Loss Reinsurance Treaty there is limitation to aggregate losses payable during the cover period by the Reinstatement Provision. If such limit is exhausted before the expiry date of the cover the XL Cover will become dead before the expiry date.
Limit per accident
Maximum liability of the insurer in respect of all claims arising out of a single accident.
Limit per bottom
This represents the maximum limit up to which any single shipment will be covered under the open cover by the insurer. 'Limit per bottom' clause will appear in all open covers covering imports or exports.
Line
One line is equal to the ceding company’s retention. A proportional treaty may have a total capacity expressed as x lines and a reinsurer's share may be y lines
Line of Business
The general classification of business as utilized in the insurance industry, i.e., fire, allied lines, homeowners, etc.
Lloyds
A voluntary unincorporated association of individuals organized for the purpose of writing insurance; normally refers to Lloyd's of London, a group of individual underwriters and syndicates that underwrite insurance risks severally, using facilities maintained by the Lloyd's of London Corporation
Load
To add charges to an insurance premium
Loss of Profits
A synonym for business interruption insurance