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Insurance · Umbrella and Excess

What does a personal umbrella liability policy provide?

Reviewed by Jordan Morley, Editorial Lead at 247SimpleTests. Written by the 247SimpleTests Editorial Team from the official source material cited on every question.

Correct answer

Additional liability coverage above the limits of underlying policies (such as auto and homeowners), and sometimes coverage for certain claims not covered by the underlying policies

  1. A Property coverage for the home
  2. B Health insurance
  3. C Additional liability coverage above the limits of underlying policies (such as auto and homeowners), and sometimes coverage for certain claims not covered by the underlying policies
  4. D Coverage for floods only

Why this is the answer

A personal umbrella liability policy provides an extra layer of liability protection above the limits of the insured's underlying policies, such as auto and homeowners. If a large liability claim exhausts the underlying policy's limit, the umbrella pays the excess up to its own (often substantial, e.g., $1 million or more) limit. Umbrellas may also cover some claims not covered by the underlying policies, subject to a self-insured retention. They typically require the insured to maintain specified minimum underlying limits. Understanding the umbrella's role as excess liability protection over primary policies is standard content on the casualty exam.
Source: NAIC Model Outline, Umbrella Liability

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About this topic: Umbrella and Excess

Umbrella and excess liability questions cover how these policies sit above underlying coverage, retained limits, drop-down coverage and the requirement to maintain underlying limits. This is one of 5 Casualty Insurance questions on umbrella and excess, each with a full explanation on a single study page.

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