Which of the following is a typical underlying limit example for umbrella policy?

• A. Occ - $1M
• B. Occ - $10M
• C. Occ - $0.5M
• D. Occ - unlimited

Answer: (A)

The key idea is that umbrella coverage pays only after the underlying policies have paid up to their limits. To attach smoothly, carriers usually require a reasonable underlying limit in place, commonly expressed as a per-occurrence limit. A typical example used in practice is $1,000,000 per occurrence. This amount provides a solid base from which the umbrella can add higher limits for larger claims, while still allowing the umbrella to respond to excess losses beyond that base.

Why not the other options? A lower underlying limit like $0.5M could leave gaps the umbrella is meant to cover, and an extremely high or unlimited underlying limit is not the standard baseline many carriers require for affordability and practicality. A per-occurrence limit of $1M is the conventional reference point that aligns with common risk management practices for umbrella policies.