Umbrella coverage that is not with the same carrier as the underlying – a potential problem

Clearly, one of the trends gaining some traction in the industry involves carriers looking for claims (especially personal lines) to be reported directly to them. This will enable the carrier to get on top of the claim faster with firsthand knowledge of the details. Technology is going to play an ever-increasing role in this trend.

A common “best practice” in claims is for liability claims to be reported to the various excess carriers. This enables those excess carriers to do their due diligence in investigating the claim and determining their strategy.

Here’s my issue and concern. What if the underlying coverage is not with the same carrier as the excess? In this scenario, the underlying claim gets reported to carrier A but since the claim was not reported to the agency, is there the possibility that carrier B (the umbrella carrier) has not been made aware of the claim incident?

If the underlying claim develops to the degree that the umbrella coverage would be involved, the umbrella carrier will not be too pleased to find out about the claim “at the last minute”.

This is an issue that agencies should talk thru internally to determine how best to handle. Ideally, the carrier should provide the agency with notification of the claim (claims download, acknowledgement of the claim with details on the adjuster assignment, etc.) and the agency claims representative should then look to see who the umbrella coverage is with. If the coverage is with a different carrier, serious consideration should be given for notifying the excess carrier of the claim.

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