Jun 10
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If you need additional commercial liability insurance coverage for liability above what your primary policies can offer, you will need to secure an Umbrella Liability insurance policy or an Excess Liability policy. If your needs are great, you may need more than one Excess or Umbrella policy. The idea behind the “form Follow” coverage is that any coverage afforded by an underlying policy will be covered by the Umbrella. This should apply to coverage for you, all the named insureds, and the additional insureds associated with your underlying policies. But, it is usually not that easy. Here are just a few problems that can arise from “Form Follow” wording in Umbrella policies.
The Underlying Policy Listed on the Declarations Page is Wrong
Some Follow-Form wording states that the excess will only apply to the policies defined on the declarations page. If errors have been made with respect to the name of the insurer, the limits, or the policy number, a coverage dispute could result. Always make a point of checking the underlying policies on the declarations page. Every effort should be made to make the expiration dates of the underlying commercial liability insurance policies concurrent with the Umbrella policy.
Mistaking the “Form Follow” Wording for the “Broad as Primary” Wording
Despite how it may appear, the most common Form Follow language used in a commercial excess policy are not as broad as the “Broad as Primary” provisions. Many times an insured enters into a contract that requires the “Broad as Primary” language and then that insured asks for Form Follow thinking that the two are the same. They are not. In fact, adding the Form Follow to your Umbrella policy can actually limit coverage significantly for you and your additional insured. If you have a contract that requires you to add coverage to your commercial insurance program, provide a copy of your contract to your agent or broker to ensure that you can get the coverage and that it is in your best interest to do so.
Form Follow Provisions Not the Same in All Layers of Commercial Excess Liability
If a company has the need for several layers of Umbrella or Excess commercial liability insurance, each insurer will need to add a form follow coverage, if the customer needs one. The problem is that these provisions are not standardized and the form follow provisions of a higher layer may be significantly more restrictive than the underlying policies. Furthermore, which underlying policy should the higher layer follow when lower layers of excess have additional exclusions or restrictions? These points are frequently disputed in court. It has happened that claims covered by the underlying policy are denied by one or more excess layer insurers due to inconsistencies in the form follow wording. This is an area where you will need to rely on your agent or broker to ensure that coverage gaps are addressed and solved.
Follow-Form Language Includes an Exception for “Anything Inconsistent”
“… anything inconsistent with a provision of this policy” is language that is included in most Form Follow policy language. What they are referring to is anything related to the “Terms and Conditions” of the policy or any of the “Definitions” of the policy. If the underlying liability policy has a different definition of a particular coverage, then the definition in the Umbrella policy will be applied, even if that definition is more limited. Though this seems to fly directly in the face of the spirit of the form follow coverage, insurers feel that it is still necessary to broadly limit or exclude certain risks. This will also apply to terms, conditions, and some exclusions.
Commercial Umbrella and Commercial Excess commercial liability insurance coordination is difficult at best. The more layers involved the more difficult this becomes to manage. Like putting a puzzle together, piecing together a commercial casualty program takes time and experience. At times, it is necessary to accept certain limitations to your coverage in order to secure it. You should be made aware of any differences in terms or policy language in any of your Umbrella Liability or Excess Liability policies.
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