Question 1

What is the legal difference between a commercial umbrella and a follow-form excess policy?

Accepted Answer

A true Commercial Umbrella (ISO CU 00 01) provides two distinct coverage functions: (1) excess limits over scheduled underlying policies (CGL, Auto, Employers Liability), and (2) broader 'drop-down' primary coverage for claims excluded by underlying policies but covered under the umbrella, subject to a Self-Insured Retention (SIR). A Follow-Form Excess policy (ISO CX 00 01) strictly incorporates the exact terms, definitions, and exclusions of the underlying primary policy, providing zero drop-down or broader coverage.

Question 2

What is a Self-Insured Retention (SIR) and when does an umbrella drop down?

Accepted Answer

A Self-Insured Retention (typically $10,000 to $25,000) operates like a deductible that applies solely when an umbrella policy 'drops down' to provide first-dollar defense and indemnity for a claim not covered by underlying insurance (e.g., worldwide territory coverage or non-owned aircraft liability). When an umbrella provides excess coverage over an existing primary policy, the SIR does not apply.

Question 3

Does follow-form excess insurance drop down if the underlying primary carrier becomes insolvent?

Accepted Answer

No. Standard commercial excess policies explicitly include maintenance of underlying insurance conditions stating that coverage attaches only upon actual payment of full underlying limits. If a primary carrier becomes insolvent, the insured must self-fund the entire primary layer before the excess policy attaches.

Question 4

What is concurrency in an upper-layer casualty tower?

Accepted Answer

Concurrency requires that policy inception and expiration dates, coverage definitions, and exclusions perfectly match across primary, umbrella, and excess layers. Non-concurrency (e.g., primary policy covering hired auto but excess policy excluding auto liability) creates an uncovered gap in the tower that must be funded directly by the policyholder.

Commercial Umbrella vs. Excess Liability Concurrency Evaluator

Standard Casualty Tower Exhaustion

Commercial Umbrella vs. Excess Liability Guide

How AI Policy Checking Works

Explore More Interactive Broker Tools

Commercial Umbrella vs. Excess FAQ

Automate Commercial Umbrella Audits & Underlying Schedule Checks