Standard Commercial Umbrella/Excess Policy

American Association of Insurance Servicesn Association of Insurance Services (AAIS) has developed a standard program for writing umbrella and excess liability coverage for commercial accounts.

The Commercial Umbrella/Excess Program features a base policy and 35 endorsements filed countrywide on an advisory basis, along with sample rules and rating information that can be adapted by insurers for their own special market needs. The form can be written over any underlying commercial liability policy, whether developed by the insurance provider or not.

According to the insurance provider, the introduction of a standard form will make it easier for carriers to write "layered" liability coverage. In addition, the policy addresses the sometimes conflicting expectations of insureds who want "drop-down" umbrella coverage for unanticipated exposures, and of reinsurers who want to minimize the possibility of drop-down exposures by designating two coverages:

• Coverage E (excess), which provides excess coverage above required limits for underlying policies listed on a "schedule of underlying insurance."
• Coverage U (umbrella), which provides drop-down coverage for premises/operations and products/completed work claims not addressed or expressly excluded in the underlying commercial general liability (CGL) policy.

The program also features 26 exclusion endorsements, making it easy for insurers or reinsurers to exclude whole categories of exposures or specified exposures.

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