Glossary

A personal umbrella policy provides high limits of liability to protect an insured against a catastrophic liability loss. This policy grants liability coverage that stacks on top of the primary liability coverage provided by the insured's homeowners, personal auto, watercraft, and any other scheduled underlying liability policies. It covers bodily injury (BI), property damage (PD), and personal injury (PI), which includes offenses such as libel, slander, false arrest, invasion of privacy, and others. The umbrella policy also fills some gaps in coverage over a specified deductible (often called a retained limit) in the underlying policy.

Primary cover refers to the policy that responds first to an insured loss, either on a first-dollar basis or after allowing for a deductible. When the primary coverage limits are paid, any remaining loss is covered by whatever excess layer of insurance may be in place.

Policy territory refers to insurance policy provisions that specify the geographic area in which coverage applies. With property and inland marine insurance the territory will usually specify where the property must be located when damage occurs for the policy to apply. Similarly, liability insurance will generally specify where the injury or damage must occur for coverage to apply. Some liability insurance policies may specify a broad territory for coverage but require that the suit must be made in a more restricted territory. For example, an umbrella liability policy might provide coverage worldwide but only if the claim or suit is brought in the United States.

Personal injury coverage is found under the commercial general liability and homeowners policies. This coverage pertains to a category of insurable offenses that produce harm other than bodily injury (BI). As covered by the 1986 commercial general liability (CGL) policy, PI includes: false arrest, detention, or imprisonment; malicious prosecution; wrongful eviction; slander; libel; and invasion of privacy. Also addressed in the homeowners policy. Under umbrella liability insurance, a broad category of insurable offenses that includes both BI and the offenses defined as "personal injury" in CGL policies.

Pollution is the contamination of an environment by substances regarded as pollutants. Liability from pollution is normally excluded to some degree by the general, auto, and umbrella liability policies. In recent years, insurers have attempted to introduce strict exclusionary language into these policies, making it necessary for insureds to seek coverage under separate "environmental impairment liability" policies.