Glossary

Loss adjustment expense (LAE) is the cost of investigating and adjusting losses.

Loss assessment is a property owner's share of a loss to property owned in common by all members of a property owners association.

Loss carryforward is a provision in the income tax code that allows a taxpayer to spread a loss over more than 1 tax year.

The loss constant is a flat amount added to the premium of a workers compensation policy (after experience rating, if applicable) on accounts with premiums of less than $500.

Loss control is a risk management technique that seeks to reduce the possibility that a loss will occur and/or reduce the severity of those that do occur.

A loss control report is often ordered on mid- and large-size commercial accounts.

A loss conversion factor (LCF) is used in the retrospective rating formula that provides a charge to cover unallocated claims and the cost of the insurer's claim services.

Loss costs are the actual or expected cost to an insurer of indemnity payments and allocated loss adjustment expenses (ALAEs).

Loss damage waiver is an agreement with an auto rental company in which the renter is released from liability for physical damage to the vehicle in exchange for a fee, subject to the terms of the rental agreement or a state statute if one exists. It is not insurance but a contractual obligation subject to many restrictions. In some contracts, the renter may be able to choose either a full damage waiver or one that holds the renter responsible for damage only over a certain specified amount, sort of an inverse deductible. The rental agreement typically stipulates that purchasing the damage waiver is not mandatory.

Loss development describes how a claim changes from the original loss reserved by the insurer until the claim is closed. Loss development can be significant on long-tail lines of coverage where there tends to be a lag between the reporting and payment of claims, such as workers compensation and liability claims.