Glossary

An umbrella liability policy is a policy designed to provide protection against catastrophic losses. It generally is written over various primary liability policies, such as the business auto policy, commercial general liability policy, watercraft and aircraft liability policies, and employers liability coverage. The umbrella policy serves three purposes: it provides excess limits when the limits of underlying liability policies are exhausted by the payment of claims, it drops down and picks up where the underlying policy leaves off when the aggregate limit of the underlying policy in question is exhausted by the payment of claims, and it provides protection against some claims not covered by the underlying policies, subject to the assumption by the named insured of a self-insured retention.

Ultimate net loss (UNL) is a term used to specify insured damages in an umbrella liability policy. Most umbrella policies include a specific definition of the covered damages encompassed by the term. This will typically include amounts actually payable to claimants in settlement or judgment. If defense and other supplementary payments are included within the policy's limit of liability, they may also be included in the policy's ultimate net loss definition.

Underlyers are insurance policies occupying layers of coverage below the particular policy being referred to. For example, a general liability policy and an umbrella liability policy might be underlyers for an excess liability policy.