Danbury Connecticut Auto Insurance

Insurance Information
Lapse
Insurance policy termination due to the insured's failure to make premium payments.

Larceny
Theft other than one involving a forcible entry (burglary) or an actual or threatened bodily harm (robbery). Many jurisdictions prefer the term theft.

Last Clear Chance Rule
The last reasonable opportunity to avoid an accident or injury. One who has the last clear chance to avoid an injury and fails to do so is usually held solely responsible, notwithstanding the injured person's own contributory negligence.

Law of Large Numbers
A principle that the larger the number of exposures considered, the more closely will reported losses equal the true probability of loss. This is the basis for the statistical expectation of loss, which determines premium rates.

Legal Reserve
Minimum reserves required by state law or regulation that life insurers must maintain to operate in that state.

Liability
An actual or potential legal obligation, duty, debt, or responsibility to another person; the obligation to compensate, in whole or part, a person harmed by one's acts or omissions. Liability insurance policies provide coverage for an insured's legal liability, excluding criminal acts, most intentional torts, and breach of contract.

Liability Insurance
Insurance that provides indemnity or compensation for a harm or wrong to a third party for which the insured is legally obligated to pay. Usually, the injury or damage is caused by the insured's negligent acts or omissions, but in some situations the law imposes strict liability without regard to negligence, and this may also be covered by liability insurance.

Liability Limits
The stipulated sum or sums beyond which an insurance company is not liable to protect the insured.

License
Legal authority granted by the state for a specified activity or business enterprise. State insurance departments grant licenses to insurance companies, agents, brokers, and other entities to transact insurance-related business within its borders.

License Bond
A bond guaranteeing that a person who has been issued a license will comply with the laws, regulations, and ordinances associated with the issuance of the license.

Lienholder
The financial institution that holds title of a vehicle until the loan is paid off.

Life Expectancy
The length of time a person of a given age can be expected to live, based on mortality tables.

Limited Collision
Physical damage protection for the insured's vehicle when damage results from impact with another object or upset. Paid ONLY if insured is LESS than 50% at fault. No deductible applies. Coverage only available in state of Michigan.

Liquidation
The conversion of an insolvent organization's assets into cash in order to pay creditors. An insurance department takes this action after it has determined that an insolvent insurer cannot be rehabilitated. Its business is wound up, and any remaining assets are used to pay policyholder claims and other creditors.

Liquor Liability Law
State or local statutes ("dram shop acts") that establish the liability of a business that sells or serves alcoholic beverages to customers for injuries caused by intoxicated customers to third parties. Laws sometimes also include people who serve alcohol to guests.

Living Trust
An ordinary trust established by a person while living to manage and distribute assets to other living persons.

Long-Term Care
Custodial care provided by a rehabilitation facility, nursing home or mental hospital on a continuum basis for chronically ill, disabled or retarded individuals. The care may be on an inpatient, outpatient, or at-home basis.

Loss
The happening of the event for which insurance pays. The amount the insurer is required to pay because of a happening against which it has insured.

Loss Avoidance
The elimination of a loss exposure by ceasing or never undertaking an activity that produces the exposure. In making this decision, the person or organization must weigh the potential value of the activity against the potential loss.

Loss Control
Prevention and reduction of losses. An insured, often in consultation with an underwriter or loss control specialist, takes measures to reduce the frequency of losses and to minimize the financial impact or severity of a loss.

Loss Expense - Allocated
An expense assigned to and recorded with a specific claim, including defense and investigation costs. Allocated claim expenses have more significance in liability insurance because of the legal costs involved in defending liability claims.

Loss Expense - Unallocated
An expense that cannot be assigned to and recorded with a specific claim. This includes claim department operating expenses such as rent, heat and electricity, and other overhead expenses.

Loss of Use / Services
Applies to a policyholder's exposure to financial loss if the part of the residence premises where the insured lives is damaged so badly that it is "not fit to live in".

Loss Payable Clause
A property insurance policy provision that authorizes the insurer to make a loss payment to a person (loss payee) other than the insured to the extent that the loss payee has an insurable interest in the property.

Loss Prevention
Measures designed to reduce the probability that a loss will occur. See also loss prevention services and loss reduction.

Loss Prevention Services
Survey, consultation, or loss control management services provided to policholders by an insurer to reduce the likelihood of accidents.

Loss Ratio
A formula used by insurers to relate loss expenses to income. Formula: (incurred losses + loss adjustment expenses) divided by earned premiums. See also accident year statistics, burning ratio, expected loss ratio, insured loss ratio.

Loss Reduction
A loss control measure designed to reduce the severity of loss occurrences.

Loss Reserve
An insurer's estimate of the amount an individual claim will ultimately cost. On an insurer's financial statement, it is the amount of estimated liabilities for known claims not yet paid and incurred but not reported claims.

Insurance Information (cont'd)
Rate
The pricing factor upon which the insurance buyer's premium is based.

Rated Policy
Sometimes called an "extra-risk" policy, an insurance policy issued at a higher-than-standard premium rate to cover the extra risk where, for example, an insured has impaired health or a hazardous occupation.

Ratemaking
The statistical process by which insurers determine risks and pricing for the basic classes of insurance.

Rating Territory
A geographical grouping in which like hazards tend to equalize and permit the establishment of an equitable rate for the territory.

Reasonable and Customary Charge
A charge for health care, which is consistent with the going rate or charge in a certain geographical area for identical or similar services.

Rebating
Giving any valuable consideration, usually all or part of the commission, to the prospect or insured as an inducement to buy or renew. Rebating is prohibited by law.

Recurring Claim Provision
A provision in some health insurance policies which specifies a length of time during which the recurrence of a condition is considered to be a continuation of a previous period of disability or hospital confinement.

Recurring Clause
A provision in some health insurance policies, which specifies a period of time during which the recurrence of a condition is considered a continuation of a prior period of disability or hospital confinement.

Reduced Paid-up Insurance
A form of insurance available as a nonforfeiture option. It provides for continuation of the original insurance plan, but for a reduced amount.

Regulation
Supervision of business practices by a governmental entity.

Rehabilitation
(1) Restoration of a totally disabled person to a meaningful occupation, (2) a provision in some long- term disability policies that provides for continuation of benefits or other financial assistance while a totally disabled insured is retraining or attempting to resume productive employment.

Reimbursement
The payment of the expenses actually incurred as a result of an accident or sickness, but not to exceed any amount specified in the policy.

Reinstatement
The resumption of coverage under a policy which has lapsed.

Reinsurance
Assumption by one insurance company of all or part of a risk undertaken by another insurance company.

Reinsurance Facility
An alternative mechanism to service those insureds that cannot obtain insurance in the voluntary market. Premiums and losses for the business that is ceded to the facility are pooled and all insurers share according to their proportion of the voluntary market.

Renewable Term Insurance
Term insurance which can be renewed at the end of the term, at the option of the policyholder and without evidence of insurability, for a limited number of successive terms. The rates increase at each renewal as the age of the insured increases.

Renewal
Continuance of coverage under a policy beyond its original term by the insurer's acceptance of the premium for a new policy term.

Renter's Policy
A package type of insurance that includes coverage similar to a homeowners policy to cover the personal property of a renter or tenant in a building.

Replacement
The substitution of health insurance coverage from one policy contract to another.

Replacement Cost
The cost to repair or replace property at construction costs prevailing at time of loss; the cost to repair or rebuild property without considering depreciation. (See Actual Cash Value)

Replacement ratio
The percentage of income before retirement that is required to be replaced to maintain the same standard of living after retirement.

Representation
Statements made by an applicant in the application, which he represents as being substantially true to the best of his knowledge and belief, but which are not warranted as exact in every detail.

Rescission
Termination of an insurance contract by the insurer on the grounds of material misstatement on the application for insurance. The action of rescission must take place within the contestable period or Time Limit on Certain Defenses but takes effect as of the date of issue of the policy, thus voiding the contract from its inception.

Reservation of Rights
An arrangement whereby an insurer defends a case without commitment to provide coverage in the event that the facts disclosed during the trial reveal that the occurrence is not covered.

Reserve
(1) An amount representing liabilities kept by an insurer to provide for future commitments under policies outstanding. (2) An amount allocated for a special purpose. Note that a reserve is usually a liability and not an extra fund.

Residual Disability
A period of partial disability that immediately follows a period of total disability. Benefits for residual disability are paid on a pro-rata basis, depending on the percentage of earnings loss.

Residual Disability Benefits
A provision in an insurance policy that provides benefits in proportion to a reduction of earnings as a result of disability, as opposed to the inability to work full-time.

Residual Market
A system through which insurance is made available to buyers that represent unusually high risks.

Retention
The net amount of risk retained by an insurance company for its own account or that of specified others, and not reinsured.

Retrocession
The process by which a reinsurer obtains reinsurance from another company.

Retrospective Date
The first date for which claims will be paid under a claims-made policy of liability insurance.

Retrospective Rating
Rating procedure which allows adjustment of an insured's final rate on the basis of the insured's own loss experience.

Revocable Trust
A trust that can be terminated or revoked by its creator.

Rider
A special policy provision or group of provisions that may be added to a policy to expand or limit the benefits otherwise payable.

Right of Survivorship
At the death of one co-owner of property, that person's interest in the property automatically passes to the surviving joint tenant or tenants.

Risk
The chance of loss. Also used to refer to the insured or to property covered by a policy. A term used to refer to a person or the peril insured.

Risk Classification
The process by which a company decides how its premium rates for life insurance should differ according to the risk characteristics of individuals insured (e.g., age, occupation, sex, state of health) and then applies the resulting rules to individual applications. (See - Underwriting)

Risk Control
Any conscious action (or decision not to act) intended to reduce the frequency, severity, or unpredictability of accidental losses.

Risk Retention Group
An alternative form of insurance in which members of a similar profession or business band together to self insure their risks.

Robbery
The taking of property from a person by force or threat of violence.

Rollover
Transfer of IRA or other qualified pension funds from one financial institution (trustee) to another.