Casualty & Liability InsuranceQuestion 88 of 531100% of test-takers answer this correctly

Which statement BEST distinguishes a commercial umbrella policy from a true excess liability policy?

a.Umbrellas always pay first and excess always pays last
b.Excess policies provide a minimum of $1,000,000 of coverage above the underlying limits in every case, whereas umbrella policies carry no minimum limit and may be written for any amount the insured asks for
c.Excess policies are always cheaper than umbrella policies
d.An umbrella may 'drop down' to cover certain claims excluded by the underlying policy, whereas a true excess policy follows form and only sits on top of underlying limits

Explanation

An UMBRELLA policy provides both (1) excess limits over the underlying policies AND (2) broader coverage that can 'drop down' to function as primary coverage where the underlying does not respond (subject to a self-insured retention). A true EXCESS policy follows form: it sits on top of the underlying limits but covers only what the underlying covers. Excess is narrower; umbrella is broader.

Law Reference: Commercial Umbrella vs. Excess Liability principles

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