Labour-only sub-contractors

A sub-contractor who contracts with the employer to provide his labour (distinguished from genuine sub-contractors who in addition generally supply materials). Such workers are defined as employees for the purpose of employer's and public liability policies.

Laid-up cover (motor)

See Fire and theft cover.

Lapse

The automatic termination of an insurance by non-payment of the renewal premium or the insurer's decision not to invite renewal of the policy.

Latent defects

See Decennial insurance.

Lay-up return

A return of premium by marine insurers in respect of a period when the vessel is out of use.

Leading office

The insurance company accepting the largest share of a risk that is co-insured, and the office that controls the documentation. See Co-insurance, Collective policy.

Legal expenses insurance

A personal or commercial policy (or extension to a policy) that provides cover for the expenses of defending or prosecuting specified categories of claim. Helplines provided by the insurer or a specialist provider often feature in this class of business.

Libel

Defamation that is in a permanent form, such as in writing or broadcast on radio or television. See also Defamation, Slander.

Licence insurance

A specialist cover that pays a sum of money in the event of non-renewal or withdrawal by the authorities of a licence for an owner or tenant of licensed premises.

Lightning

A peril that is automatically insured under the terms of the standard fire policy (and the Lloyd's fire policy) covering damage caused by lightning regardless of whether a fire develops as a result.

Limit of indemnity

Also known as limit of liability. A term used in liability insurance to identify the maximum amount payable in respect of any one claim or series of claims arising from one event. Certain types of policy, for example products and professional indemnity cover, also contain an aggregate limit for any one period.

Limitation periods

The periods set down under the Limitation Acts to govern the permitted time limits for commencement of legal proceedings. In normal circumstances proceedings must commence within three years of the date of the incident giving rise to the action for personal injury, 12 years for title to land or six years for property loss or damage. Periods are extended for those under some incapacity, such as minors and persons of unsound mind.

Line slip

A means of placing business by a broker in a situation where (usually several) underwriters have agreed in advance their participation in a defined range of risks provided that the risks are individually agreed by the leading underwriter (and possibly a fixed number of other underwriters).

Liquidated damages

An attempt in a contract to pre-judge a fair measure of damages for a breach of contract conditions. Insurers tend to exclude payments for such amounts under the terms of their standard liability wordings. See Unliquidated damages.

Livestock insurance

A general term for specially tailored policies designed to cover different types of animal against accidental death or disease. See also Bloodstock insurance.

Lloyds' (of London)

A complex institution, which is a corporation that organises a market of individual insurance underwriters in London who write business worldwide on behalf of individual members and corporate bodies. Many ancillary services are provided by the institution.

Lloyd's syndicate

A group of individual underwriting members or corporate bodies (providing corporate capital) with an active underwriter who has authority to accept insurances up to an authorised premium capacity on the syndicate's behalf. Each individual underwriting member is personally liable for his own particular proportion of each insurance but not for the shares of other members.

Local Authorities clause

An extension to a property insurance policy providing for payment of claims (subject to the adequacy of the sum insured) where a local authority insists on changes in any aspect of construction following damage to a property.

Long-term agreement

An undertaking by the insured to renew a general insurance policy (usually a fire insurance policy) for a given number of years in return for a discount in premium, provided that the insurer offers renewal of the contract on unchanged terms.

Long-term policy

A non-marine policy effected for more than 12 months, typically three or five years, without annual renewal dates. Premiums may be paid in full at inception or by instalments.

Loss

(a) An event giving rise to an insurance claim.

(b) A claim.

(c) Disappearance of the subject-matter of insurance.

Loss adjuster

A professionally qualified person, bound by a code of conduct for impartiality, who is employed by insurers to negotiate claims and recommend settlement amounts.

Loss assessor

A person employed by an insured to assist in the presentation and negotiation of (usually property) claims with the insurer, or loss adjuster if appropriate.

Loss of use

(a) An extension to, or standard part of, a motor insurance policy that provides an alternative vehicle when the insured vehicle is off the road awaiting repair following insured damage. Courtesy cars are often organised through the repairer of the vehicle; see Credit hire.

(b) The period following a loss when an asset is not available for use.

Loss Prevention Council (LPC)

A body concerned with all aspects of fire prevention and loss prevention, providing information and research findings to the Association of British Insurers and Lloyd's. It encompasses the Fire Protection Association.

Loss ratio

Claims incurred expressed as a percentage of earned premiums. Loss ratio calculations will embrace different elements depending on the purpose for which the figures are to be used: other elements that may feature include reinsurance, expenses and exchange rate fluctuations.

Losses-occurring basis

The term used to describe liability insurances under which provision of indemnity is dependent on the date (during the period of the insurance) when the incident occurs that gives rise to a claim, not necessarily the date on which the claim is reported. See Claims-made basis.

Lost certificate declaration

A form that motor insurers often require to be completed when a certificate that should be returned to them has been lost or destroyed. It does not meet the more stringent requirements of the Road Traffic Acts (which require the making of a statutory declaration).

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