7.6 Umbrella, Farmowners-Ranchowners, Mobile Home & Specialty Marine, Railroad and Aviation Coverages
Key Takeaways
- An umbrella policy pays above required underlying liability limits and may drop down, subject to a self-insured retention, for claims the umbrella covers that underlying policies do not.
- A follow-form excess policy provides higher limits on the same terms as the underlying policy but usually does not broaden coverage the way an umbrella can.
- If the insured fails to keep required underlying insurance, an umbrella typically responds as if that underlying coverage were in force, leaving the gap with the insured.
- Under the NFIP Standard Flood Insurance Policy, special loss settlement applies to a single-family dwelling that is a manufactured or mobile home or a travel trailer.
- General average is an ocean marine rule under which all parties to a voyage share the cost of a deliberate sacrifice made to save the vessel and cargo.
Last updated: September 2026
Umbrella and Excess Liability
Personal Umbrella
A personal umbrella sits above the insured's auto, homeowners and watercraft liability coverage:
- Required underlying limits: the umbrella insurer specifies minimum underlying limits, such as auto bodily injury and property damage limits and homeowners personal liability limits. It pays only after those limits are exhausted.
- Drop-down coverage: for a loss the umbrella covers but no underlying policy covers, such as some personal injury offenses like libel, slander or false arrest, or worldwide exposures, the umbrella pays after the insured pays a self-insured retention (SIR).
- Failure to maintain underlying insurance: if the insured drops or reduces a required underlying policy, the umbrella generally pays as if the underlying coverage were in force. The insured absorbs the gap.
- Defense: umbrellas commonly provide defense when underlying limits are exhausted or when the umbrella drops down. Check whether defense is inside or outside limits.
Commercial Umbrella Versus Excess
| Feature | Commercial umbrella | Follow-form excess |
|---|---|---|
| Limits | Above scheduled underlying CGL, auto liability and employers liability | Above a specific underlying policy |
| Coverage terms | May be broader than the underlying policy and may drop down (with an SIR) | Follows the underlying form's terms, conditions and exclusions |
| Claim handling | Notify early when a serious claim may exceed primary limits | Same; the excess carrier usually follows the primary adjustment |
Adjuster duty: when a liability exposure may exceed primary limits, such as a serious injury or multiple claimants, notify the umbrella or excess carrier promptly. Late notice to excess carriers is a frequent coverage dispute.
Businessowners, Farmowners-Ranchowners and Mobile Home Policies
- Businessowners Policy (BOP): a package for eligible small and mid-sized businesses. It combines building and business personal property coverage, business income and extra expense on an actual loss sustained basis, and business liability. See the business income section for eligibility and the built-in time element coverage.
- Farmowners-ranchowners: combines the farm property coverages (farm dwellings and household property; scheduled and unscheduled farm personal property; barns and outbuildings) with farm liability. The farm program is covered in detail in the inland marine, equipment breakdown and farm section.
- Mobile (manufactured) homes:
- Standard homeowners eligibility generally excludes mobile homes unless a mobilehome endorsement adapts an HO-2 or HO-3 to them, or a specialty mobile home program is used.
- Mobile home forms account for anchoring and tie-downs, the cost of moving the home to protect it from an approaching peril, and valuation of an older unit, where actual cash value disputes are common.
- Under the federal Standard Flood Insurance Policy, a single-family dwelling that is a manufactured or mobile home or a travel trailer is subject to special loss settlement, not the replacement cost settlement available to a qualifying principal residence.
Other Coverages: Maritime, Railroad and Aviation
Personal auto, homeowners and commercial general liability forms exclude most aircraft and watercraft exposures, and CGL forms limit liability assumed under railroad contracts. PSI's outline expects you to recognize the specialty coverages that fill those gaps.
Ocean Marine (Maritime)
| Coverage | Purpose |
|---|---|
| Hull | Physical damage to the vessel; often includes collision liability for damage the vessel causes to other vessels |
| Cargo | Goods being shipped |
| Freight | The carrier's loss of freight charges when cargo is lost |
| Protection and indemnity (P&I) | Shipowner's broad liability, such as injury to crew and passengers, damage to docks, wreck removal and pollution |
Key maritime concepts:
- General average: when the master deliberately sacrifices property, such as jettisoning cargo, or incurs extraordinary expense to save the voyage, all interests share the loss proportionally.
- Particular average: a partial loss borne only by the owner of the damaged interest, absent coverage.
- Sue and labor: reimburses reasonable expenses the insured incurs to prevent or reduce a covered loss.
- Implied warranties: the vessel is seaworthy, the voyage has no deviation from its course, and the venture is legal.
- Maritime employee injuries: seamen's claims arise under the federal Jones Act. Injured longshore and harbor workers are covered under the Longshore and Harbor Workers' Compensation Act. Both matter in Louisiana's port and offshore economy and sit outside state workers' compensation and CGL coverage.
Railroad
- Sidetrack agreements are "insured contracts" under the ISO CGL, so a business's contractual liability to a railroad for a spur track can be covered.
- A contractor working on or near railroad property is often required to buy Railroad Protective Liability coverage (ISO CG 00 35). This separate policy names the railroad as the insured and protects it against liability arising from the contractor's work.
- Railroads' own liability and rolling stock exposures are insured through specialty markets.
Aviation
| Coverage | Purpose |
|---|---|
| Aircraft hull | Physical damage to the aircraft, commonly written as "not in motion," "ground (not in flight)," or "all risk ground and flight" |
| Aircraft liability | Bodily injury (often excluding passengers) and property damage to others |
| Passenger bodily injury liability | Injury to passengers, sometimes subject to a per-seat limit |
| Medical payments | Medical expenses for occupants regardless of fault |
| Admitted liability (voluntary settlement) | Pays a set amount to an injured passenger, in exchange for a release, without proof of fault |
Aviation policies commonly include pilot warranties, which name approved pilots and certification or hours requirements, and airworthiness conditions. Violations can void coverage for a loss. Homeowners, auto and CGL forms all exclude aircraft liability, which is why aviation exposures need separate policies.
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Test Your Knowledge
A personal umbrella covers a libel claim that the insured’s homeowners policy does not cover. How does the umbrella usually respond?
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Test Your Knowledge
What distinguishes a follow-form excess liability policy from a commercial umbrella?
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Test Your Knowledge
A ship’s master orders part of the cargo thrown overboard during a storm to save the vessel and the rest of the cargo. Under which ocean marine principle do all parties to the voyage share this loss?
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Test Your Knowledge
A paving contractor must work beside railroad tracks, and the railroad requires coverage protecting the railroad from liability arising from the contractor’s work. What coverage is typically purchased?
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D