Exam (elaborations)
ARM 402 (Excess Liability Insurance) – Q’s And A’s
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ARM 402 (Excess Liability Insurance) – Q’s And A’s
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ARM 402 (Excess Liability Insurance) – Q’s And A’sA policy that covers liability claims in excess of the limits of an underlying
policy or a stated retention amount, is called: Right Ans - An excess liability
policy.
Many companies purchase one or more excess liability insurance policies to:
Right Ans - Cover claims that exceed their primary insurance limits or their
retention amount for self-insured liability claims.
This approach may seem simple but is often complicated by the fact that:
Right Ans - The various primary and excess policies can be subject to different
terms of coverage.
Common types of excess liability policies include: Right Ans - Following
form excess liability policies, self-contained excess liability policies, and
umbrella liability policies.
Two additional types of excess liability insurance are: Right Ans - Specific
excess, and aggregate excess.
Specific excess, and aggregate excess liability insurance policies are often used
in connection with: Right Ans - Self-insured workers compensation
obligations.
A following form excess liability policy can't always be counted on to provide:
Right Ans - The same scope of coverage as the corresponding primary liability
policy.
Although a following form excess liability policy may state that it follows all
the terms and conditions contained in the designated primary liability policy,
the excess policy could be: Right Ans - Modified by endorsement to exclude
certain hazards that the primary policy covers.
Successive levels, or layers, of coverage using an excess of loss strategy in
which each layer is in excess of the lower limits provided by another insurer,
resulting in a structured program of high limits of coverage, is called: Right
Ans - Layering.
, The layers of coverage in a company's insurance program that are most often
called on to pay claims, are called: Right Ans - Working layers.
Liability insurance is normally arranged using a technique known as: Right
Ans - Layering.
With layering, the primary, AKA first layer, consists of: Right Ans - One or
more primary liability policies.
In some cases, mainly with large companies, the primary layer is: Right Ans
- Self-insured.
Many companies have only: Right Ans - One layer in excess of the primary.
Typically, a company in this category, with only one layer in excess of the
primary, has: Right Ans - An umbrella liability policy above its primary
general liability, commercial auto, and employers liability coverages.
This company may also have: Right Ans - One or more separate excess
liability policies providing a second layer of coverage above other primary
policies, such as management liability or environmental liability, that aren't
covered by the umbrella policy.
These layers are: Right Ans - Primary, umbrella liability, and the first layer
of excess policies above primary policies not covered by the umbrella
The primary, umbrella liability, and the first layer of excess policies above
primary policies not covered by the umbrella, are generally referred to as:
Right Ans - The working layers.
Companies that want higher limits of liability insurance above the working
layers can: Right Ans - Purchase additional layers of excess liability
insurance.
The number of layers varies, depending on: Right Ans - The limits desired
by the company and the limits available from insurers.
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