PLNationalhard
An insured's scheduled underlying PAP is $250K/$500K BI. He fails to renew his PAP and is uninsured at the time of a $400,000 BI judgment. His personal umbrella has a $1M limit. How does the umbrella respond?
AThe umbrella pays the full $400,000 because it covers any covered judgment up to its $1M limit regardless of any underlying
BThe umbrella pays nothing at all because there is no underlying PAP in force at the time of the judgment
The umbrella pays $150,000 (the excess above the scheduled $250K), and the insured personally owes the first $250,000
DThe umbrella pays $400,000 minus only the self-insured retention shown on its declarations page
Why this is the answer
The Maintenance of Underlying Insurance condition is the contractual sword that protects the umbrella insurer from absorbing primary risk. If the insured allows the scheduled underlying to lapse, be cancelled, or be reduced in limit, the umbrella does not refuse the claim outright — instead, it computes its share as if the underlying were still in force at the scheduled limit. The insured personally fills the gap. Here: underlying-as-if-in-force = $250K (insured owes), umbrella excess = $400K - $250K = $150K. See ISO DL 98 01 Maintenance of Underlying Insurance Condition.
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