1 Commercial Excess and Umbrella Liability Insurance Quiz

Following-form excess policy covers

A following-form excess policy covers a liability loss that exceeds the underlying limits only if the loss is covered by the underlying insurance.

A self-contained excess policy covers

A self-contained excess policy applies to a loss that exceeds the underlying limits only if the loss is also covered under the terms of the excess policy

Which one of the following statements is correct regarding aggregate umbrella liability insurance limits? Select one: A. Aggregate limits work the same way for all umbrellas policies B. Almost all umbrella policies contain aggregate limits that operate like the aggregate limits in the primary insurance. C. Almost no umbrella policies contain aggregate limits similar to those found on primary insurance. D. The aggregate limits never apply to coverages that are subject to an aggregate in the underlying policies.

B. Almost all umbrella policies contain aggregate limits that operate like the aggregate limits in the primary insurance. CorrectCorrect. Almost all umbrella policies contain aggregate limits that operate like the aggregate limits in the primary insurance.

The coverage that an umbrella liability policy provides for claims not covered at all by the underlying policies is called Select one: A. Retained coverage. B. Drop-down coverage. C. Restrictive coverage. D. Aggregate coverage.

B. Drop-down coverage. CorrectCorrect. It is called drop-down coverage.

Drop-down coverage in an umbrella liability policy is provided for claims that are which one of the following? Select one: A. Not covered by an underlying policy, excluding claims not covered due to the depletion of the underlying policy's aggregate limits B. Not covered by an underlying policy, including claims not covered due to the depletion of the underlying policy's aggregate limits C. Covered by an underlying policy D. Covered by an underlying policy and claims not covered by the underlying policy due to the depletion of the underlying policy's aggregate limit

B. Not covered by an underlying policy, including claims not covered due to the depletion of the underlying policy's aggregate limits

Which one of the following statements is correct regarding the maintenance of underlying insurance condition of an umbrella liability insurance policy if the underlying insurance is not kept in force? Select one: A. The umbrella policy would drop down to cover claims that would otherwise be covered by the underlying policies. B. The umbrella policy would cover claims that exceed the limits of the underlying policies as if they had been kept in force. C. The umbrella policy would drop down to cover claims that would otherwise be covered by the underlying policies, subject to a self-insured retention. D. The umbrella policy would cover claims that exceed the limits of the underlying policies as if they had been kept in force, subject to a self-insured retention.

B. The umbrella policy would cover claims that exceed the limits of the underlying policies as if they had been kept in force. CorrectCorrect. The umbrella policy would cover claims that exceed the limits of the underlying policies as if they had been kept in force. A self-insured retention would not apply.

Which one of the following elements would you find in the Conditions of an umbrella liability insurance policy? Select one: A. Coverage triggers condition B. Self-insured retention condition C. Maintenance of underlying insurance condition D. Restrictions on coverages beyond what may appear on underlying policies condition

C. Maintenance of underlying insurance condition

Which one of the following statements is correct with respect to the exclusions of an umbrella liability insurance policy? Select one: A. The exclusions of an umbrella policy are written so they never invoke the drop-down feature. B. The exclusions of an umbrella policy always match those on the underlying policies to avoid any related problems. C. There is no exclusions section of an umbrella policy, since the insuring agreement is written to avoid the need for any. D. An umbrella policy can use exclusions to broaden or narrow exclusions found in the underlying policies.

D. An umbrella policy can use exclusions to broaden or narrow exclusions found in the underlying policies. CorrectCorrect. Exclusions in an umbrella policy can be used to broaden or narrow exclusions found in the underlying policies.

The self-insured retention in an umbrella liability policy applies under which one of the following circumstances? Select one: A. An umbrella liability policy is dropping down to pay a claim because the primary policy's aggregate limit has been exhausted. B. A claim covered by the umbrella liability policy is covered by the primary policy. C. A claim exceeds the limits of the umbrella liability policy. D. An underlying policy does not cover the claim.

D. An underlying policy does not cover the claim. CorrectCorrect. The self-insured retention applies to the coverage provided by an umbrella liability policy when the underlying policy does not cover the claim.

An excess liability policy covers a liability loss that exceeds the underlying limits only if the loss is covered by the underlying insurance. What type of excess liability policy is this? Select one: A. Aggregate policy B. Combination policy C. Self-contained policy D. Following-form policy

D. Following-form policy CorrectCorrect. A following-form excess policy covers a liability loss that exceeds the underlying limits only if the loss is covered by the underlying insurance.

Which one of the following statements about umbrella liability insurance is true? Select one: A. It becomes void when the primary aggregate limits are exhausted. B. It is normally written as excess insurance only above a comprehensive general liability policy. C. It fills the gaps in primary insurance rather than providing additional coverage. D. It may contain exclusions more restrictive than those found in the primary policies.

D. It may contain exclusions more restrictive than those found in the primary policies. CorrectCorrect. Umbrella liability insurance may contain exclusions more restrictive than those found in the primary policies.

An excess policy that applies to a loss that exceeds the underlying policy limits only if the loss is specifically covered under the terms of the excess policy is known as a Select one: A. Following-form policy. B. Combination policy. C. Drop-down policy. D. Self-contained policy.

D. Self-contained policy. CorrectCorrect. A self-contained excess policy is subject to only its own terms, meaning that a loss must be specifically covered by the policy to apply.

Umbrella liability policies almost always provide excess coverage over several primary policies which include all of the following, EXCEPT: -Commercial general liability -Auto liability -Replacement liability -Employers liability

Replacement liability