Glossary

Layer refers to a horizontal segment of the liability insured—for example, the second $100,000 of a $500,000 liability is the first layer if the cedent retains $100,000 but a higher layer if it retains a lesser amount.

Layering is the building of a program of insurance coverage using the excess of loss approach. Layered programs involve a series of insurers writing coverage, each one in excess of lower limits written by other insurers. Umbrella liability coverage is frequently structured in this manner, whereby a number of umbrella insurers write coverage at various levels, on an excess of loss basis, ultimately providing an insured with a high total limit of coverage.

LC5 refers to the median level concentration, a standard measure of toxicity. It tells how much of a substance is needed to kill half of a group of experimental organisms in a given time.

LD50 refers to the dose of a toxicant that will kill 50 percent of the test organisms within a designated period. The lower the LD50, the more toxic the compound is.

Leading involves guiding, leading, and motivating others to achieve plans. It is one of the four functions of the management process.

Lead reinsurer refers to the reinsurer that negotiates the terms, conditions, and premium rates and first signs on to the line slip; reinsurers that subsequently sign on to the same slip are considered following reinsurers and are bound by the same terms and conditions to which the lead reinsurer agreed.

The term lead umbrella refers to the first umbrella policy in a multilayer excess program that sits directly over the primary policies. Typically, higher-level excess policies sitting above the lead umbrella in this type of placement contain follow-form provisions making them follow the "lead" of the terms and conditions of the first underlying umbrella.

Lean construction takes the principles of lean production and applies them to the construction process. Like lean production, the focus is on efficiency, elimination of waste, collaboration, and communication, with a goal of completing a project on time, on budget, and with minimal disputes between parties.

Leasehold interest refers to property insurance covering the loss suffered by a tenant due to termination of a favorable lease because of damage to the leased premises by a covered cause. The principal coverage is the net leasehold interest, which is the present value of the difference between the total rent payable over the unexpired portion of the lease and the total estimated rental value of the property during the same period.

Lease gap coverage is an optional coverage endorsement to a commercial auto policy that applies in the event of a total loss to a covered auto that is financed or has a leased agreement. At the time of the total loss, if the amount of outstanding indebtedness on the auto is greater than what the insured could recover under actual cash value (ACV) or cost to repair or replace, a lease gap endorsement covers the deficit.