Note: This article was revised on November 10, 2017 to clarify that the new ISO umbrella and excess endorsements extend coverage on a noncontributory, but not primary, basis. (Thanks to Larry Hunt of the Hunt Insurance Group for pointing out the misleading implication in the original article.)

Although I’m no longer a staff member of the Big “I”, I continue as a volunteer faculty member of the Virtual University. About three weeks ago, an agency member submitted a question about primary and noncontributory coverage on umbrella policies. It was his impression that you could not add AI status on a primary and noncontributory basis to umbrella and excess policies, but an underwriter told him that, if such status is provided on the underlying policies, it extends to umbrella/excess policies. His concern was that the underwriter had told him things in the past that later were determined to be incorrect.

On this question, how an umbrella or excess policy responds depends on the language in the form in question. Never assume or generalize. While umbrella and excess policies often extend AI status, whether such status is extended on a primary and/or noncontributory basis may depend on the policy language or statutory or case law dealing with issues such as horizontal vs. vertical exhaustion of limits.

That being said, in 2016 ISO introduced noncontributory endorsements for both their umbrella and excess policies (and a primary and noncontributory endorsement their BAP):

  • CA 04 49 11 16  – Primary And Noncontributory – Other Insurance Condition
  • CU 24 78 11 16  – Noncontributory – Other Insurance Condition
  • CX 24 33 11 16  – Noncontributory – Other Insurance Condition

These changes were introduced at the request of the Big “I” Technical Affairs Committee and/or the Big “I” Mid-American Insurance Conference (www.matcinsurance.com) in an attempt to address the vertical vs. horizontal exhaustion requirement in an increasing number of construction contracts. ISO has already done this in 2013 for the CGL program with their new CG 20 01 endorsement. In the case of umbrella and excess policies, since by accepted definition they are excess over any other primary coverage, the new endorsements are noncontributory but not primary to the primary policies of an AI.

So, absent any overriding extra-contractual law to the contrary, these endorsements can now be used by ISO subscribing carriers to comply with contract requirements to provide noncontributory coverage on CUP/excess policies. For a more detailed explanation of the differences between “primary” status and “noncontributory” status, check out IRMI’s excellent article from liability expert Craig Stanovich:

Commercial Umbrellas and the Demand for Primary and Noncontributory

Photo by Carlo Mirante

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Bill Wilson

Founder at InsuranceCommentary.com
One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America. Reprint Request Information

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