Question

1. an umbrella policy is also referred to as

a. a comprehensive policy.
b. a drop - down policy.
c. a gap policy.
d. an excess liability policy.

1. a principal purpose of an umbrella liability policy is to

a. meet the statutory requirements for coverage.
b. provide a high limit of coverage for an extreme loss.
c. provide an inexpensive option for consumers.
d. replace an underlying policy before it exhausts its limits.

1. while providing a high limit of liability coverage, an umbrella policy will not

a. broaden coverage of an underlying policy.
b. cover some claims not covered by an underlying policy.

Explanation:

1. An umbrella policy is indeed an excess liability policy. It provides additional liability coverage beyond the limits of underlying policies.
2. The main purpose of an umbrella liability policy is to offer a high - limit of coverage for extreme losses. When the underlying policies' limits are exhausted, the umbrella policy kicks in for large - scale claims.
3. An umbrella policy does not replace an underlying policy before its limits are exhausted. It is secondary to the underlying policy. It can broaden coverage (in some cases) and cover some non - covered claims (subject to terms), but it does not replace the underlying policy prematurely.

Answer:

1. d. an excess liability policy.
2. b. provide a high limit of coverage for an extreme loss.
3. d. replace an underlying policy before it exhausts its limits.