Glossary J - M

Judgment Rating

A rating modification (either decrease or increase) that is based on the underwriters experience, best judgment, and analysis in classifying and underwriting a particular type of risk.

Lapse

In property and casualty insurance a lapse in the termination of a policy because of a failure to pay premium when due.

Liability Insurance

Coverage for a policyholder's legal liability resulting from injuries to other persons or damage to their property.

License

A certificate of authority issued by the CDI to an insurer, agent, broker, or broker-agent to transact insurance business.

Limits of Insurance

The maximum amount of benefits the insurance company agrees to pay in the event of a loss.

Loss of Consortium

A potential situation in any bodily injury claim (including Workers Compensation claims) where a spouse contends that the bodily injury of their partner deprives them of the natural affections (spousal duties), help, and companionship of said spouse.

Loss Payable Clause

A provision that authorizes the insurer to make a loss payment to a person, company, or organization (loss payee) other than the insured. The loss payee must have an insurable interest (such as a lienholder for business personal property or a mortgagee on real property).

Managing General Agent (MGA)

An agent contractually authorized by an insurance company to manage all or part of the insurer's business activities. An MGA can manage the marketing, underwriting, policy issuance, premium collection, appointing and supervision of other agents, claims payments, and reinsurance negotiations of an insurance company.

Material Misrepresentation

A factual falsification made in such a manner that the insurance company would have refused to insure the risk if the truth had been known at policy issuance. A material misrepresentation gives an insurance company grounds to rescind a contract.

Misquote

An incorrect estimate of an insurance premium.

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