Endorsements & LiabilityQuestion 87 of 158
A homeowner buys a $1,000,000 Personal Umbrella Policy (PUP). Which feature most accurately describes how the PUP responds to a covered liability loss?
a.It replaces the underlying auto and homeowners liability coverage entirely
b.It pays first, before the underlying auto or homeowners policy responds
c.It pays excess only after the required underlying limits have been exhausted, and may drop down for certain perils not covered below
d.It pays the insured's share of property losses to the dwelling and contents
Explanation
A PUP sits OVER underlying auto and homeowners liability coverage. The insured must keep the required underlying limits (commonly $250,000/$500,000 auto BI and $300,000 HO liability). The umbrella pays excess once those limits are exhausted and may drop down to cover certain perils (such as personal injury) excluded by the underlying policies, subject to a self-insured retention (SIR).
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