Casualty & LiabilityQuestion 88 of 215
Which statement BEST distinguishes a commercial umbrella policy from a true excess liability policy?
a.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
b.Excess policies are always cheaper than umbrellas
c.Umbrellas pay first; excess pays last
d.Excess policies provide $1,000,000 minimum coverage but umbrellas do not
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 principlesPractice all 215 questions free — no signup required.
Related questions on this topic
- Shareholders sue the board of directors of a corporation for breach of fiduciary duty in approving an unfavorable merger. Which policy is designed to cover the directors' defense costs and any settlement?
- A former employee sues her ex-employer alleging sexual harassment by a supervisor and wrongful termination in retaliation for complaining. Which type of liability policy is specifically designed to respond to these allegations?
- A California retailer suffers a ransomware attack that exposes the personal data of 50,000 customers. The retailer's CGL policy excludes 'damages arising from access to or disclosure of confidential information.' Which separate policy is most likely intended to respond?
- Under California's Dram Shop law, a bar that sells alcohol to an OBVIOUSLY INTOXICATED MINOR who then causes a fatal car crash:
- California Insurance Code §11580 requires every liability policy issued or delivered in California to include a clause that:
- A California resident slips and breaks her arm on June 1, 2024. She does not file her personal injury lawsuit until July 1, 2026. Under California's statute of limitations, the lawsuit will MOST LIKELY be:
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against California Property & Casualty Insurance License Exam · How we review