Label clause

A clause in a marine policy on cargo limiting liability for a claim to an amount sufficient to pay the cost of reconditioning and the cost of new labels and of relabelling.


Legal term for unreasonable delay in enforcing an equitable right.

Land risks

Insurances relating to land-based property. In respect of these commercial insurers do not grant war risk cover.


The sliding down of a mass of land.

Lapsation profit

The addition of surplus to a life fund that accrues when insurances lapse and the reserve held in respect of them can be released.


An insurance is said to lapse when it ceases to operate either because the insured does not pay the renewal premium or because the insurer does not invite its continuance.

Lapse ratio

The proportion of policies lapsed or surrendered during a year to those in force at the beginning of the year.


The unlawful taking of the property of another with intent to deprive the owner of its use.

Last survivor annuity

Same as Joint life and survivor annuity.

Last survivor assurance

An insurance on two or more lives that becomes payable only on the death of the last life to survive.

Latent defect

A defect not apparent or discoverable by the exercise of reasonable care.

Launching state

A state from which a space object is launched into space, or one which performs or procures the launch.

Law of large numbers

A natural law of probability which states that the larger the number of exposures to risk of independent, homogeneous units the closer will be the actual number of casualties to the probable number in an infinite series.


Term used to denote a stratum of cover, e.g., for claims between L10,000 and L50,000, or between L50,000 and L250,000.


Effecting reinsurance divided between two or more reinsurers who charge different rates for identical cover.

Lay-up return

A return of premium made by marine insurers in respect of a period during which the insured vessel is laid up.


See Leading underwriter.

Lead broker

Same as Flag broker.

Leading underwriter

The underwriter who first accepts a share or line of an insurance.

Leading Underwriters' Agreement

An agreement in the London marine insurance market whereby when there are alterations to a risk that do not materially affect it, they may be accepted by certain underwriters only whose acceptance will bind the others.

Legal costs extension

The extension of a liability insurance to provide for the payment of the insured's legal costs in litigation other than the defence of the insured against claims arising under the liability insurance (which costs are commonly covered by the insurance in any event).

Legal expense insurance

Insurance of the legal costs and expenses incurred by the insured in (a) pursuing a civil claim against a third party, (b) defending a civil action brought by a third party and (c) defending criminal proceedings where the offence alleged was not a deliberate wrongful act.

Legal personal representative

The executor or administrator of an estate.

Legal protection insurance

Same as Legal expense insurance.

Legal reserve life insurance company

U.S. term for a life insurance company that operates under laws that specify a basis for the minimum reserves it must maintain.


A person to whom a lease is granted. A tenant under a lease.


A person who grants a lease. A landlord.

Letter of credit

A document authorising payment of an agreed sum to a named person at the risk of the issuer. If expressed as irrevocable the authority cannot be withdrawn.

Letter of indemnity

A written undertaking to indemnify the person to whom it is addressed against the consequences of some action or liability on his part.

Lettered Rules

Those of the York-Antwerp Rules (q.v.) that are prefixed by a letter as distinct from a number. The lettered rules are applicable only in circumstances to which it is impossible to apply the numbered rules.

Letters of administration

An official document evidencing the title of personal representatives of a deceased person to administer an estate in a case where the deceased named no executors or those named are unable or unwilling to act.

Letters of mart and countermart

An obsolete expression describing licences formerly granted by the Crown to subjects entitling them to fit out armed ships to recoup themselves for losses inflicted on them by the subjects of other states by way of reprisal.

Level annual premium method

Same as Annual premium method.

Level premiums

In long-term life assurance, as the probability of death rises with age it would be logical to charge a higher premium year by year, with steep increases in the later years of life. Instead, it is customary for the assurer, having calculated the death risk and allowed for the effect of interest on premiums, to express the sum required from the assured as a premium payable at the same rate annually throughout the years during which premiums are payable.


A charge on insurers for some specific purpose, e.g., to meet the outgo of the Policyholders Protection Board which makes payments to safeguard those liable to loss through the insolvency of insurance companies in the terms of the Policyholders Protection Act 1975.

Liability insurance

Insurance in respect of liability to third parties, most commonly for accidents resulting in bodily injury and damage to property.

Liable or not liable

Term in a reinsurance contract where the reinsurer is prepared to indemnify the ceding insurer not only for claims for which there is clearly liability under the original insurance but also where the ceding insurer denies liability but makes a compromise or ex gratia payment.

Libel and slander insurance

Same as Defamation insurance.

Libel bond

A bond to secure the release of a vessel arrested because of a complaint (called a libel) made to a U.S.A. court.

Licence insurance

Insurance against the financial consequences of losing a licence, principally granted in respect of licences to sell alcoholic liquor or to conduct a place of entertainment.


A legal right to hold the property of another as security for the fulfilment of some obligation / In life assurance another word for debt (q.v.).


A person entitled to a lien (q.v.).

Life annuity

A contract providing an income during the life of a person.

Life annuity certain

An annuity payable for a minimum specified period and thereafter throughout the lifetime of the annuitant.

Life assurance

Assurance providing for the payment of a sum of money on the death of the person assured or, in the case of endowment assurance, at the end of a specified term even though the person assured is still living.

Life Assurance Companies (Payment into Court) Act 1896

An Act entitling a life assurance company to pay into court policy money where no sufficient discharge can be obtained for it in any other way.

Life Assurance Premium Relief

A resident in the United Kingdom who pays premiums under a qualifying policy (q.v.) made before 14 March 1984 on his life or that of his spouse is allowed to deduct 15 percent by way of income tax relief when paying the premium.

Life assured

The person on whose life an assurance depends is termed the life assured. He may or may not be the owner or holder of the life assurance policy.

Life contingency

The probability of death, of survival, or of the duration of human life.

Life expectancy

The average number of years that persons of a given age may expect to survive according to a mortality table.

Life salvage

An award to a salvor for the saving of life.

Life table

A table showing the number of lives that would survive to successive ages on given assumptions as to the rate of mortality.

Life tenant

A person having a life interest in an estate.

Life underwriter

The employee of an assurer who is responsible for considering the terms on which life assurances can be accepted / A life assurance salesperson (U.S.).

Lift insurance

The insurance of lifts against breakdown and accidental damage, coupled with third party liability.


A peril covered by a fire insurance policy.


The insurer's maximum liability under an insurance.

Limit of indemnity

The maximum sum payable under a contract of indemnity. It may be expressed as "per accident", "per event", "per occurrence", or "per annum".

Limit of liability

Same as Limit of Indemnity.


A bar to a lawsuit on the ground that it has not been brought, or pursued, within some specified time.

Limitation of liability

A statutory limitation to the amount of the liability of the owner or operator of a vehicle for claims against him, e.g., under the Carriage of Goods by Sea Act 1971.

Limited conditions

See Limited terms.

Limited liability company

A company the liability of whose members for its debts is limited to the value of each member's shares. See also Company limited by guarantee.

Limited market

Term used to describe the situation where only a few insurers are willing to accept insurance of a particular type.

Limited payment life assurance

A life assurance on which premiums are payable for a limited number of years that may be less than the duration of the assurance, e.g., a whole-life assurance with premiums ceasing at age 80.

Limited revaluation premium

A payment by a pension scheme to the State in respect of a member leaving the scheme, where the scheme limits to 5% per annum its liability for the revaluation of preserved benefits.

Limited terms

Insurance that excludes partial losses.


A share of an insurance or of reinsurance business. Thus, the proportion of an insurance accepted by a Lloyd's syndicate is termed a line. In reinsurance the original insurer's retention is termed a line. Thus a ten-line reinsurance treaty is one under which the insurer retains one line (one-eleventh of the insurance) and can place with the various reinsurers ten lines (ten-elevenths of the insurance) / A category of insurance, e.g., fire (U.S.).

Line sheet

A schedule for the guidance of company underwriting staff, showing the maximum amount of insurance that the company will accept for different classes of risk.

Line slip

A slip in respect of a defined type of insurance, which, if initialled by a leading underwriter and a second underwriter, will bind other underwriters who have agreed in advance to the procedure. The broker presenting the slip may or may not have binding authority (q.v.).

Line stamp

A stamp impressed by a Lloyd's underwriter on a slip and bearing his syndicate's pseudonym and number.


A ship working to a regular time schedule.


The process of realising the assets and quantifying the liabilities of a company which it is proposed to dissolve. The court, on petition, may order the provisional liquidation of a company, in which case it may be resuscitated. Otherwise the court will issue an order for voluntary or compulsory liquidation.

Liquidator's bond

A bond in respect of the conduct of the liquidator of a company that is being wound up.

Litigation costs and expenses

A liability insurance provides indemnity in respect of litigation costs and expenses incurred in connection with a third party claim against the insured.

Livestock insurance

Insurance against the death of livestock.

Living on top

Having a pension scheme which provides benefits in addition to the full state pension.

Lloyd's (of London)

A corporation that organises the market of individual insurance underwriters in London and provides ancillary services including a marine intelligence service.

Lloyd's Acts

Acts of 1871, 1911 and 1982 which regulate the constitution of Lloyd's.

Lloyd's Agency System

An international network of persons appointed by Lloyd's to provide intelligence and to perform certain services for underwriters when so instructed by them.

Lloyd's Agent

A person appointed by Lloyd's to provide intelligence, e.g., as to shipping movements and, when so instructed by underwriters, to carry out surveys and adjust claims.

Lloyd's arbitration

A procedure for settling by arbitration a dispute between parties within the Lloyd's community.

Lloyd's Associates

Individuals, not being insurers, who are admitted to Lloyd's Underwriting Room for business purposes, e.g., as accountants or solicitors.

Lloyd's Association

A group of individual underwriters who subscribe to insurances each one for his own proportion, on a basis similar to that of Lloyd's of London (U.S.).

Lloyd's Broker

A firm or individual who is authorised to place insurance at Lloyd's and who in doing so represents the insured. There are some 250 Lloyd's brokers, large and small.

Lloyd's certificates

Insurance certificates issued by the Committee of Lloyd's. They facilitate the payment of claims abroad.

Lloyd's Form

Lloyd's Standard Form of Salvage Agreement.

Lloyd's List

A daily paper published by Lloyd's which records merchant shipping movements, news of chartering markets, law reports and other items relating to shipping, insurance, transportation and finance.

Lloyd's Name

A U.K. resident who is an underwriting member of Lloyd's and works at Lloyd's having been for five years before election employed by a Lloyd's underwriting agent, or by a Lloyd's broker, in the production, placing or servicing of insurances.

Lloyd's Shipping Index

A daily publication listing over 20,000 merchant vessels on overseas voyages, with particulars of the vessels and their latest reported position.

Lloyd's Syndicate

A group of underwriting members of Lloyd's who are bound by the signature of an active underwriter on their behalf. When an insurance is accepted on behalf of the syndicate each member is liable for his stated fraction only of the insurance but not for the fractions of other members. His personal liability is unlimited.

Lloyd's Underwriter

An underwriting member of Lloyd's. The term is more often used to describe the active underwriter who accepts insurances on behalf of a syndicate of underwriting members and who may or may not be himself an underwriting member.

Lloyd's Underwriting Agent

A person who acts as an agent for an underwriting member of Lloyd's; (a) as a member's agent who acts in all respects for the member, other than in managing the underwriting syndicate; b) and/or as a managing agent, who manages the affairs of the syndicate.


The placing of goods on a vessel for carriage / Charging a higher rate of premium than normal, because of some adverse feature of an insurance / An addition to the pure premium (q.v.) to allow for expenses, contingencies or profit desired.

Loading profit

The part of the surplus of a life assurance company that represents the amount by which the costs covered by the loading of the pure premium were less than the amount assumed for them in a previous valuation.

Loading the premium

Charging more than normal.

Loan value

The value of a long-term assurance policy up to which a loan will be granted on the security of the policy.


A facility under a pension scheme for the policyholder to borrow money from the insurer, to be repaid out of the lump sum available on retirement.

Local government guarantee

A guarantee to a local or public authority required by the Local Government Act 1972, s.114, in respect of loss of money or other property happening as a result of fraud or dishonesty on the part of officials employed by the authority.

Local government indemnity

An indemnity to a local authority in respect of claims by third parties for loss sustained by reason of errors or omissions in registers of local land charges and the like, and notices issued in connection with them.

Location clause

A clause in an open cover limiting the insurer's liability on property in one location prior to shipment.

Location limit

A limit in an open policy on marine cargo restricting the liability of the insurers on cargo in any one location before shipment.

London Underwriting Centre

A centre opened in 1993 in the City of London to provide a market-place for the underwriting rooms of insurance and reinsurance companies, complementing existing market facilities offered by Lloyd's and the Institute of London Underwriters.

Long service death benefit

Death benefit under a pension scheme payable on death before retirement and increasing with length of service.

Long-tail claims

Claims notified or outstanding a long time after the expiry of a period of insurance.

Long-term agreement

An agreement in fire insurance whereby the insured undertakes, in consideration of a discount, to renew the insurance for a given number of years on the original terms if these are offered him by the insurers.

Long-term business

By the Insurance Companies Act 1982, defined as life and annuity, marriage and birth, linked long term, permanent health, tontines, capital redemption, and pension fund management.

Long-term insurance

Insurance forming part of long-term business (q.v.) / In fire insurance a contract that is expressed at the outset as being for a term of two or more years.


An event giving rise to a claim under an insurance.

Loss adjuster

One who, acting predominantly on the instructions of insurers, is habitually employed in a professional capacity in the negotiation and settlement of loss by fire or other contingencies.

Loss adjustment

The settling of an insurance claim.

Loss assumption clause

Same as Cut-through clause , (U.S.).

Loss development

An estimate correcting an initial estimate of the cost of a claim reported to an insurer or reinsurer.

Loss event

Term used in relation to the total claims payable by an insurer or reinsurer resulting from a single cause such as an earthquake.

Loss expectancy

An insurer's estimate of the cost of claims that could arise from the peril insured against.

Loss lag

Same as Loss development.

Loss loading

A factor applied to pure loss costs to produce a reinsurance rate of premium.

Loss of engagements

Where a shipowner is deprived of the use of a ship through an insured peril, e.g., collision, the loss consequential on loss of engagements is insurable.

Loss of limb

In personal accident insurance the policy may grant a lump sum benefit for the loss of one or more limbs resulting from an accident.

Loss of profits insurance

Same as Business interruption insurance.

Loss of specie

There is said to be loss of specie when property the subject of insurance is so damaged that it ceases to be a thing of the kind insured, as where a motor cycle is crushed or clothes are burnt to ashes.

Loss of use insurance

Insurance of loss to an aircraft operator or a motorist consequential upon accidental damage to an insured vehicle, by way of indemnity or fixed benefit.

Loss portfolio

An amount payable by a reinsurer to a cedent in consideration of the release of the reinsurer from liability arising under a contract of reinsurance in respect of claims arising prior to a fixed date.

Loss portfolio reinsurance

Reinsurance relating to past losses on a portfolio of insurances.

Loss prevention

Steps taken by insurers, by way of advice, research and the provision of information or the imposition of terms on an insurance, to prevent losses.

Loss ratio

The proportion of claims paid or payable to premiums earned.

Loss reserve

A fund set aside to pay claims outstanding at the end of a period of account.

Loss sustained cover

A reinsurance treaty which covers only losses sustained during the term of the treaty.

Losses occurring basis

A provision in a reinsurance treaty whereby the reinsurance applies to all losses occurring during the treaty period even if the risk attached before that period. The reinsurance does not apply to claims occurring after the reinsurance period even though the underlying insurance began to run during that period.

Losses to extinction basis

A basis whereby when profit commission is payable under a reinsurance treaty and a loss is made in one year, it is carried forward so as to reduce the calculation of profit in the ensuing year. Any balance of loss remaining is similarly applied in subsequent years until it is extinguished.

Loss-of-licence insurance

Insurance to provide a benefit to the member of an aircrew whose licence is withdrawn because of physical unfitness arising from accident or illness.

Lost or not lost

Phrase in a marine policy meaning that the risk attaches even though, at the time of acceptance of the insurance, the insured property, unknown to the insured, had been lost.

Low start endowment assurance

An endowment assurance under which the premiums payable during the early years are lower than normal, while in the later years of the policy they are higher than normal.

Loyalty discount

A discount offered to the holder of an insurance which is renewable at his option, to induce him to renew the policy with the same insurer.

Lutine Bell

The ship's bell of H.M.S. Lutine, wrecked 1799 while carrying a cargo of gold valued at Ll,400,000, The bell hangs in the Room at Lloyd's and is struck when important announcements are to be made, once for good news and twice for bad. Its use nowadays is very rare.