COMMERCIAL UMBRELLA LIABILITY INSURANCE
Commercial umbrella (aka excess) liability insurance is an important source of protection that supplements the limits of an insured's underlying policies such as general liability, automobile liability, and employers liability. Umbrellas also protect insureds from exclusions and gaps that exist in their primary liability insurance. Covered causes of loss that are not normally included in primary policies are subject to a self-insured retention (SIR), which is the responsibility of the insured to pay. SIRs in the amounts of ,000 or ,000 are common. An umbrella policy's coverage is triggered when the limits of the underlying insurance have been exhausted. Less commonly, an umbrella may also respond to a claim that is not covered by an underlying policy, but only when the loss amount exceeds the self-insured retention.
A typical commercial umbrella liability policy offers features such as worldwide coverage; personal injury coverage; blanket contractual liability protection (for both written and oral agreements); care, custody, and control coverage; non-owned aircraft liability; watercraft liability; advertisers liability; liquor law liability; XCU liability; and an extension of protection to additional insureds.
Umbrella liability policies in the domestic market still vary considerably among insurance carriers because many companies continue to use their own forms.

Following form policy
Umbrella liability insurance indemnifies the insured for loss in excess of the total applicable limits of liability stated in the schedule of underlying primary insurance policies. The umbrella liability policy is typically a "following form," meaning that it tracks with the provisions of the underlying insurance. For losses that are not covered by underlying insurance, the umbrella policy generally does not apply.

With respect to any occurrence not covered by underlying insurance, or damage that is not covered by underlying insurance but that results from an occurrence covered by underlying insurance, the umbrella policy indemnifies the insured for its ultimate net loss. The loss must exceed the insured's self-insured retention limit (,000 or ,000, for example) and must involve damages that the insured is legally obligated to pay by reason of liability imposed by law or assumed by the insured under contract. Further, the damage must involve personal injury, property damage, or advertising injury (all as defined in the Definitions section of the policy) caused by an eligible occurrence.

Maintain underlying insurance
The umbrella liability policy has a critical requirement. It holds the insured accountable for maintaining the policies listed in the schedule of underlying insurance. They must be kept in force, without alteration of terms and conditions, during the term of the umbrella liability policy. The one notable exception is for the reduction or exhaustion of any underlying aggregate liability limits that is caused by response to an eligible loss.

Single limit of protection
An umbrella liability policy is written on the basis of a single limit of protection (e.g., million) per occurrence for personal injury, property damage, and advertising injury. The self-insured retention or "drop down" deductible in connection with occurrences not covered by the underlying primary policies but within the scope of the umbrella may vary from ,000 to ,000 or higher. The level depends on the particular insurer's requirements and is commonly based on the size of the insured and the level of exposure not protected by underlying insurance. Depending on circumstances, an umbrella carrier may require a higher retention by the insured or require the purchase of additional underlying coverage as a condition of writing umbrella coverage.