A contract between you and an insurance company, an insurance policy is a document that outlines the coverage provided in the event of a negative occurrence to you or your property. Various types of insurance policies exist, including those for accidents, property damage, and life insurance. To determine the premium, or cost of the policy, insurance companies utilise a process called rating. In some cases, multiple insurance companies collaborate in an insurance pool to collectively assume the risk of covering specific items.
A following-form policy is an insurance policy that adopts the terms and conditions of another insurance policy. It is commonly used in excess liability insurance, where a company can purchase a following-form policy to provide additional coverage that mirrors the terms of their primary policy. For example, if a company has a general liability policy with a limit of $1 million and wants more coverage, they can buy a following-form policy with a limit of $2 million. This way, if a claim exceeds the $1 million limit of the primary policy, the following-form policy will come into effect and cover the excess amount up to the $2 million limit.
A following-form policy is an insurance policy that provides coverage for risks not covered by the primary policy. It “follows” the terms and conditions of the primary policy and fills in any gaps in coverage.
A following-form policy is typically necessary when the primary policy does not provide sufficient coverage for certain risks. It is commonly used in situations where multiple insurance policies are required to adequately cover all potential liabilities.
When a claim is made that falls within the scope of both the primary policy and the following-form policy, the primary policy is typically responsible for covering the claim first. If the primary policy’s coverage is exhausted or does not cover the full amount, the following-form policy will then kick in to provide additional coverage.
Yes, a following-form policy can be customized to meet the specific needs of the insured. The terms and conditions of the policy can be negotiated to ensure that it adequately covers the desired risks.
Yes, there may be limitations to a following-form policy. It is important to carefully review the policy language to understand any exclusions or restrictions that may apply.
Yes, a following-form policy can be canceled by either the insured or the insurer. The cancellation terms and conditions will be outlined in the policy agreement.
The cost of a following-form policy will vary depending on various factors, including the type of risks being covered, the limits of coverage, and the insurer’s underwriting criteria. It is best to obtain quotes from multiple insurers to compare costs.
In most cases, a following-form policy is not transferable to a new owner. If ownership of the insured property or business changes, a new policy will typically need to be obtained.
No, a following-form policy generally cannot be used to cover existing claims. It is designed to provide coverage for future risks and claims that arise after the policy is in effect.
A following-form policy is not typically required by law. However, certain industries or contracts may require it as a condition of doing business or to meet specific contractual obligations. It is important to consult with legal and insurance professionals to determine if a following-form policy is necessary in your particular situation.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 16th April 2024.
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