LAPSE - An insurance policy which, having reached its expiry date, is not renewed or extended is said to have lapsed.
LEASE - A contract by which one party, called the lessor, conveys to another, called the lessee, real estate, equipment or facilities for a specified term and for a specified rent.
LEGAL LIABILITY - Liability imposed by law on individuals or corporations to pay for harm done to others. Such law may be the common law, statute law or customs which over a period of time have taken on the same status as law. Legal liability may also be assumed under the terms of a contract.
LESSEE - The person to whom a lease is granted. A lessee of real property is commonly called the “tenant.”
LESSOR - The person granting a lease.
LIABILITY - This is a legally enforceable obligation. Liability insurance pays for the damages or losses suffered by others for which the insured person is legally responsible.
LIABILITY INSURANCE - Insurance which agrees to indemnify the insured for sums he may be required by law to pay to third parties as damages for bodily injury or damage to property.
LIABILITY LIMITS - The amount or amounts beyond which an insurance company does not protect a person insured for liability coverage. For example, a common liability limit for an auto insurance policy is $1 million. If a policyholder is successfully sued for more than $1 million, the balance of the judgment would be paid out of the policyholder’s pocket.
LIABILITY LOSS EXPOSURES - The features of an individual risk to be taken into consideration by an insurer when underwriting a liability cover. These would include location and condition of premises, products made or distributed, work done away from the premises and so on.
LIEN - A charge upon real or personal property as security for some debt or duty. Also, the security interest created by a mortgage. The conditions of an insurance policy require the disclosure to the insurer of any existing lien on the insured property.
LIKE KIND AND QUALITY - Refers to replacement of damaged, destroyed or lost property with used property of similar type and condition.
LIMIT OF LIABILITY - The maximum amount, as stated in the policy, which an insurer is bound to pay in case of a loss.
LIMITATION PERIOD - The period of time in which a claim may be brought by the policyholder.
LOSS - A word often used in place of the word "claim." It refers to the amount an insurer must pay because one of the possibilities of loss insured against under a policy, has happened.
LOSS OF USE INSURANCE - Optional coverage purchased to compensate for the loss of use of property, if it cannot be used because of a loss covered by the policy. This is most common in auto insurance. For example, loss of use insurance will have the insurance company pay for the use of a rental car while the insured car is being repaired.