A Commercial Umbrella policy may cover losses that are exceeded by the primary policy when the losses exceed:

A Commercial Umbrella policy is designed to provide additional liability coverage above and beyond the limits of an underlying primary policy. The correct choice pertains to the self-insured retention amount, which represents the threshold that must be met before the umbrella policy responds to a claim.

Self-insured retention is akin to a deductible; it is the amount of risk a policyholder assumes before their higher level of coverage kicks in. When a loss occurs that is higher than the limits of the primary policy, the umbrella policy will cover the excess amount, but only after the self-insured retention is satisfied. This means that if losses exceed the primary policy limits and also surpass this retention amount, the umbrella policy provides coverage for those additional losses, reinforcing its purpose of offering heightened protection.

Understanding self-insured retention is critical for policyholders as it influences their exposure to risk and can affect their overall insurance strategy. This concept is foundational to how an umbrella policy operates in conjunction with underlying insurance coverage, ensuring comprehensive protection when significant liabilities arise.