When a claim exceeds a community association’s general liability limit, the board may assume the commercial umbrella policy sitting above it will simply pick up where the primary policy left off, same terms, same coverage, just a bigger number. That assumption holds only if the umbrella policy actually “follows form.” Many don’t, even when the declarations page uses that exact phrase.
What ‘Follow Form’ Actually Means
A follow-form policy adopts the terms, conditions, and exclusions of the underlying policy it sits above, applying the same coverage at a higher limit. A true follow-form structure means the umbrella responds to the same claims the primary policy would, just past the point where the primary limit runs out.
The catch is that most commercial umbrella policies aren’t written on a standard form, the way general liability policies often are. Each carrier drafts its own wording, which determines how closely the umbrella actually tracks the primary policy beneath it.
Why Most Commercial Umbrella Policies Aren’t Fully Follow Form
According to the International Risk Management Institute, it’s a misconception that every umbrella policy provides the same coverage as the underlying insurance policy. Many umbrella policies are stand-alone, meaning they carry their own separate insuring agreements, definitions, and exclusions independent of the primary policy.
Even policies that explicitly promise to follow form typically qualify that promise. Many umbrella policies state they follow the underlying terms except where the umbrella’s own wording differs, in which case the umbrella’s wording controls. In practice, that means an association can’t assume full alignment just because a policy uses the phrase “follow form.” Reading the actual excess or umbrella policy language, not the label on the declarations page, is the only way to know where it deviates.
Where the Mismatch Shows Up: Sublimits and the Aggregate
General liability policies commonly include their own sublimits, such as a cap on damage to property rented to or occupied by the association. Umbrella and excess insurers generally don’t intend to pay losses beyond a sublimit like that. Some exclude the exposure entirely.
That creates a second, less obvious problem: whether a claim paid under that sublimit still counts against the primary policy’s overall aggregate limit for the purpose of triggering the umbrella. If the umbrella policy doesn’t explicitly recognize a sublimit payment as reducing the underlying aggregate, a gap opens between what the primary policy has actually paid out and what the umbrella considers exhausted. An association could end up with a claim that falls into that gap, with neither the sublimited primary coverage nor the umbrella responding to the full amount.
What Agents Should Ask Before Assuming a Match
A few direct questions help confirm what an association’s commercial umbrella policy actually promises before a claim tests it:
- Does the umbrella policy state it follows form, and if so, does that promise include an exception clause that lets the umbrella’s own wording override the primary policy’s terms?
- Are the primary policy’s sublimits, such as those tied to property in the association’s care, custody, or control, carried into the umbrella, or excluded outright?
- Does the umbrella policy recognize a sublimit payment as reducing the primary policy’s aggregate limit, or does it require the full aggregate to be paid out before the umbrella attaches?
- Who has the duty to defend once the primary policy’s limit runs out: the umbrella insurer, the association itself, or neither?
Read the Umbrella Policy, Not Just the Label
A commercial umbrella policy that says “follow form” on the declarations page can still leave gaps once the primary policy’s sublimits and exclusions come into play. The only way to know where an association’s coverage actually lines up is to read the umbrella policy’s own terms against the primary policy it sits above, not the label the carrier gave it.
Agents working with HOA and condo boards can contact Kevin Davis Insurance Services to review how a client’s commercial umbrella coverage aligns with the underlying primary policies.
HOA Umbrella Policy FAQ
What does “follow form” mean in a commercial umbrella policy?
Follow form means the umbrella policy adopts the terms, conditions, and exclusions of the underlying policy, applying the same coverage at a higher limit. Many umbrella policies that use this term still include exceptions that let their own wording control instead.
Do umbrella policies cover the same sublimits as the primary policy?
Not always. Underlying policies often include their own sublimits, and umbrella or excess insurers frequently exclude those specific exposures rather than extending coverage above the sublimited amount.
Can there be a coverage gap between a primary policy and its umbrella?
Yes. If the umbrella policy doesn’t recognize a sublimited claim payment as reducing the primary policy’s aggregate limit, a gap can open where neither policy fully responds to a claim.
Who defends a claim once the primary policy limit is exhausted?
This depends on the umbrella policy’s own defense provisions. Some umbrella insurers have no duty to defend at all, some reserve only the right to associate in the defense, and others have a limited duty to defend once the underlying insurance runs out or denies coverage.
About the Author
Kevin Davis is President of Kevin Davis Insurance Services, Inc. (KDIS) and managing general agent for Travelers Insurance — one of the largest specialty insurance writers for community associations in the United States, currently insuring more than 40,000 associations nationwide. With three decades in the insurance industry — 25 of them devoted exclusively to community associations — Davis brings rare depth of expertise to a highly specialized field. He founded KDIS in 2000 with a two-person team and has since built it into a firm of more than 65 employees, establishing the company as a trusted leader in its market. A nationally recognized authority on loss prevention, Davis writes and speaks regularly on the subject. He also serves as a faculty member for Community Associations Institute (CAI) training programs throughout the country.
About Kevin Davis Insurance Services
For over 35 years, Kevin Davis Insurance Services has built an impressive reputation as a strong wholesale broker offering insurance products for the community association industry. Our president, Kevin Davis, and his team take pride in offering committed services to the community association market and providing them with unparalleled access to high-quality coverage, competitive premiums, superior markets, and detailed customer service. To learn more about the coverage we offer, contact us toll-free at (855) 790 -7393 to speak with one of our representatives.