Umbrella liability insurance provides excess liability coverage over several of the insured's primary liability policies. Most umbrella liability policies provide coverage that is broader than the insured's primary policies. An excess liability policy may be what is called a following form policy, which means it is subject to the same terms as the underlying policies; it may be a self-contained policy, which means it is subject to its own terms only; or it may be a combination of these two types of excess policies. Umbrella policies have three functions: (1) To provide additional limits above the each occurrence limit of the insured's primary policies; (2) To take the place of primary insurance when primary aggregate limits are reduced or exhausted; and (3) To provide broader coverage for some claims that would not be covered by the insured's primary insurance policies, which would be subject to the policy retention. Most umbrella liability policies contain one comprehensive insuring agreement. The agreement usually states it will pay the ultimate net loss, which is the total amount in excess of the primary limit for which the insured becomes legally obligated to pay for damages of bodily injury, property damage, personal injury, and advertising injury.

Your umbrella liability insurance gives you liability coverage:

Limits of Insurance
All umbrella liability policies contain an each occurrence limit of insurance. Some umbrella liability policies may have a separate limit that applies to all personal and advertising injury for one person or for the organization. Also, some policies are written with aggregate limits for only one type of loss. Other
policies may have one or more aggregates for all losses.
Umbrella policies can be written with several different variations
of the aggregate limits. There are no standard umbrella policies.

Pay on Behalf
This is an insuring agreement used in some umbrella policies.
The agreement promises to make direct payment on behalf
of the insured for those sums of money the insured becomes
legally obligated to pay because of liability imposed upon the
insured by law, or assumed under contract.

Indemnity
This is the insuring agreement clause found in most umbrella
policies as opposed to the pay on behalf agreement. When
the indemnity insuring clause is used, the insurer will indemnify
or reimburse the insured for those sums of money the insured
becomes obligated to pay by reason of liability imposed upon
the insured by law, or assumed under contract.

Self Insured Retention
The self insured retention is the amount of the loss an insured
must pay before the umbrella policy would be required to respond
. The self insured retention would only apply when a loss is
excluded from coverage under the primary policy, but not
excluded under the umbrella policy.

Required Underlying Limits
Required Underlying Limits is a requirement of the insurer.
It requires the insured to have certain types policies in force
as underlying layers to the umbrella policy.

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