Umbrella Liability policies can be issued in two ways: as stand-alone policies or as follow-form policies. This distinction is important for determining whether the Umbrella policy mirrors the provisions of the underlying coverage — or stands on its own.
A stand-alone Umbrella policy contains its own terms, conditions, exclusions, and limitations. It operates independently of the underlying policies — i.e., the coverage it provides is based solely on what is written in the Umbrella policy itself.
A Follow Form Umbrella policy, on the other hand, incorporates the terms and conditions of the listed underlying policies. In this case, the Umbrella coverage is determined by what’s included in those underlying policies.
When leases require Umbrella Liability coverage to include provisions like Additional Insured (AI), Waiver of Subrogation (WoS), or to be provided on a primary and non-contributory (PNC) basis, insurers often rely on a Follow Form Umbrella rather than adding separate endorsements.
In this context, a Follow Form policy allows Umbrella coverage to mirror the provisions of the underlying General Liability policy — as long as the Umbrella policy itself doesn’t include language that contradicts or overrides those provisions. This industry practice streamlines compliance: instead of creating a fully endorsed stand-alone Umbrella, the policy can extend AI or WoS status through the Follow Form mechanism.
However, there is an important limitation when it comes to Primary and Non-Contributory (PNC) coverage.
Most Umbrella policies — even those labeled Follow Form — include their own language stating that they apply on an excess basis. This is expected, as Umbrella coverage is designed to be triggered only after the underlying policy limits are exhausted. Because of this, Follow Form wording is not enough to meet the requirement for the Umbrella to be primary. If PNC is required for UL, the COI must explicitly state that the Umbrella policy applies on a primary and non-contributory basis.
In short:
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It is important to note that follow-form verbiage suffices the Occurrence Basis requirement for the Umbrella Liability policy.
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As explained above, the follow-form verbiage does not satisfy the primary and noncontributory requirement for the Umbrella policy, but our initial approach was to accept follow-form language as enough for AI, WoS, and PNC.
That is why, for now, auditors must use the follow-form verbiage to satisfy the primary and noncontributory requirement for Umbrella, unless there is an auditing note instructing otherwise:
