Endorsements & Optional CoveragesQuestion 87 of 474
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, so the insured may drop those policies once the $1,000,000 umbrella is in force
b.It pays first, before the underlying auto or homeowners policy responds
c.It pays the insured's share of property losses to the dwelling and contents once the homeowners limits for Coverage A and Coverage C have been exhausted
d.It pays excess only after the required underlying limits have been exhausted, and may drop down for certain perils not covered below
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).
Law Reference: ISO HO 04 90; CIC Personal Umbrella conceptsThis topic, taught in full in the Personal Lines Insurance Producer guide. Personal Lines Insurance Producer — Complete Study Guide (2026) — PDF + EPUB, $19.99 · 14-day refund →
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