Most commercial leases and construction contracts require more liability coverage than a single general liability policy provides. The difference is made up with umbrella or excess policies stacked on top. Owners and general contractors then ask for a simple assurance: that the umbrella or excess “follows form” to the underlying policy.
It is a reasonable thing to want. Unfortunately, it is rarely as simple as it sounds.
What “follow form” is supposed to mean
A true follow-form excess policy adopts the terms, conditions and exclusions of the policy beneath it. If the general liability policy covers a claim, the excess policy picks up where the primary limits end, under the same rules.
In practice, very few umbrella or excess policies are that simple. Most contain their own insuring agreements, their own definitions, their own conditions and their own exclusions. Even endorsements with “follow form” in their title do not always adopt every term of the underlying policy.
Why that matters to the parties protected by the layers
The coverages owners and contractors care most about are exactly the ones that tend to break between layers:
- Additional insured status. An umbrella may cover an additional insured only when the primary policy does, only when a written contract requires it, or only up to the limits the contract demands. Some forms cover additional insureds far more narrowly than the underlying policy.
- Primary and non-contributory wording. Your contract may require the tenant’s or subcontractor’s coverage to be primary to your own and not share with your policies. That wording has to exist on each layer. The standard ISO umbrella and excess forms do not provide it on a blanket basis. It must be endorsed.
- Waiver of subrogation. The same issue applies. A waiver on the general liability policy does not automatically carry into the umbrella or excess layers. Those policies need their own waiver endorsements.
If the umbrella or excess policies do not match, you may be protected for the first million dollars of a claim and on your own, or sharing with your own carrier, for everything above it.
The standard forms
The Insurance Services Office publishes standard forms that many carriers use as a starting point, including a commercial umbrella form (CU 00 01) and a commercial excess form (CX 00 01). Those standard forms do not simply follow every term of the general liability policy, and they contain language that prevents blanket waiver of subrogation or blanket primary and non-contributory treatment from existing without an endorsement.
Many carriers write their own proprietary umbrella and excess forms instead, and those vary widely. Some are broader than the standard forms. Many are narrower.
Why the agent won’t write “follows form” on the certificate
When you ask for a certificate stating that the umbrella follows form, a careful agent will be cautious. Unless they have read the umbrella or excess policy and confirmed it truly adopts the underlying terms, that statement is a coverage affirmation. It is the same kind of statement that ACORD instructions and many state regulations prohibit on certificates, and it would not change what the policy actually says.
What to verify
- See every layer on the certificate. All applicable policies and all limits should be shown. If the total seems low or a layer seems to be missing, ask.
- Request the additional insured wording from the umbrella or excess policy, not just from the general liability policy.
- Request the primary and non-contributory and waiver endorsements for each layer that your contract requires to carry them.
- Look at excess towers carefully. When multiple excess carriers sit above an umbrella, each may have its own terms. Your protection is only as strong as the narrowest layer.
- Match the contract’s language to the policy’s language. If your contract says the umbrella must be “on a follow form basis,” confirm that is what was purchased.
A note on hidden layers
Occasionally an insured will ask their agent to leave an umbrella or excess layer off a certificate, often out of concern that a large visible limit will make them a bigger target. Reputable agents will not do this. Every applicable policy and limit belongs on the certificate. If you suspect a layer is missing, ask directly. In the event of a large claim, every carrier needs to be placed on notice promptly, and you cannot notify a carrier you do not know exists.