A glossary of commonly used general insurance and risk management terms.

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LEAD COMPANY – The lead company, when a large risk is shared by a number of insurers, is usually the insurer with the largest share of the risk. The lead company would also normally be responsible for appointing loss adjusters in the event of a claim, although the other participating companies would not necessarily be bound by the lead’s decision.

LEAD UNDERWRITER – The underwriter with whom a broker arranges terms for an insurance or reinsurance cover. Generally the lead underwriter would be recognized in the market as an expert in the class of business being written, and based on his/her acceptance, the broker would proceed to show the slip to the “following market” underwriters.

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, commonly called the tenant.

LESSOR – The person granting a lease, also known as the landlord.

LIABILITY INSURANCE – In an accident where you are charged with injuring another person or damaging his or her property, liability insurance pays the cost of your legal defense, as well as the cost of any damages for which you are found legally responsible.

LIABILITY LIMITS – The sum or sums beyond which a liability insurance company does not protect the insured on a particular policy.

LIBEL – A written statement about someone, which is personally injurious to that individual.

LIMIT OF LIABILITY – The maximum amount, which an insurance company agrees to pay in case of loss.

LIMITS – Maximum amount a policy will pay either overall or under a particular coverage.

LOSS – Generally refers to:

  1. the amount of reduction in the value of an insured’s property caused by an insured peril,
  2. the amount sought through an insured’s claim, or
  3. the amount paid on behalf of an insured under an insurance contract.

LOSS OF USE INSURANCE – Coverage to compensate an insured for the loss of use of property if it cannot be used because of a peril covered by the policy. Also called business interruption insurance.

LOSS PAYABLE CLAUSE – A policy clause providing, at the direction of the insured, that in the event of a loss, payment shall be made to an interested party other than the insured, e.g., a mortgagee.

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