Which requires the forms & endorsements to match those found on its underlying/primary policies?
Follow-form endorsement quiz: A company purchases umbrella and excess insurance policies for liability coverage in addition to its primary policy. A claim exceeds the limits of the primary policy but falls within the coverage threshold of the additional policies. Is the company free from out-of-pocket costs? If you answered “not necessarily,” you get an A. How insurers write the policies to work together makes a big difference. Companies thinking the policies include the exact same coverages by “following form” may find themselves exposed. Understanding follow-form endorsements could be the difference between an insurance company covering the claim and the insured left holding the bill. Let’s start with the policies. While often thought of interchangeably, umbrella and excess policies have distinct differences. Umbrella policies provide liability coverage in addition to that of the primary policy. They can be written to restrict or broaden coverage from the underlying policy and often serve to fill coverage gaps. Umbrella policies can cover multiple underlying policies concurrently. Excess policies, like umbrella policies, provide additional liability coverage. Unlike umbrella policies, they provide no broader protections than the underlying policy and often are written to be more restrictive. Excess policies typically only apply to one underlying policy at a time. Companies often request a follow-form endorsement with both types of policies. This ensures the policies, regardless of how written, adhere to the same terms and conditions of the underlying policy they support in the event of a claim or judgement. Follow-form endorsements can be a company’s best friend. They are designed to eliminate confusion and provide policy alignment for peace of mind. However, failing to understand their broader impact on coverage can turn them into a business’s worst nightmare. Policyholders should beware of these potential problems before a well-intentioned follow-form endorsement leaves their company underinsured:
Don’t let follow-form endorsements be your foe. Take time to read the language and identify the red flags. For more help with follow-form endorsements, follow the leader – myCOI. Learn why hundreds of companies consider myCOI’s team of insurance experts and technology their most useful friend. |