In an Umbrella Liability Policy, what is the term for the amount that must be satisfied before coverage applies?

In an Umbrella Liability Policy, the term for the amount that must be satisfied before coverage applies is referred to as the "retained limit." This retained limit acts as a threshold that must be met by the policyholder's underlying insurance policies (such as general liability or auto liability) before the umbrella policy begins to provide additional coverage. Essentially, it means that the umbrella policy only kicks in after the claims from the underlying policies exceed this specified amount.

Understanding the retained limit is crucial because it clarifies the responsibilities of the policyholder and the coverage provided by the umbrella policy. If the retained limit is not met, the umbrella coverage will not be activated, leaving the policyholder accountable for the costs up to that limit. Therefore, knowing how the retained limit functions within the framework of umbrella insurance helps policyholders effectively manage their liabilities and understand their financial exposure.