A business carries $1,000,000 of primary general liability and a $5,000,000 umbrella. A jury returns a $3,500,000 verdict on a claim both policies cover. How is the verdict funded?
Explanation
An umbrella sits above scheduled underlying policies and pays only after the underlying limit is exhausted, so the primary contributes its $1,000,000 and the umbrella pays the remaining $2,500,000 out of its $5,000,000. It does not respond first while the primary sits untouched, and it is not a pro rata sharing arrangement with the primary. Because the umbrella limit far exceeds the shortfall, none of this verdict is left uninsured.
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