Glossary

A loss is the basis of a claim for damages under the terms of a policy.

Losses incurred are the total amount of losses sustained during a given time period that are paid and unpaid but reserved.

Losses in excess of policy limits is an expression used in reinsurance agreements that refers to damages awarded by a court against an insurer in favor of the insured, due to the insurer's having failed to settle a third-party claim against the insured within the policy limits by reason of bad faith, fraud, or gross negligence.

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.