View source for Definition:Follow-form policy

📋 '''Follow-form policy''' is an [[Definition:Excess insurance | excess]] or [[Definition:Umbrella insurance | umbrella]] [[Definition:Insurance policy | insurance policy]] that adopts the same terms, conditions, and exclusions as the underlying primary policy it sits above, rather than containing its own independent [[Definition:Policy wording | policy wording]]. In the insurance market, this structure simplifies the layered coverage stack by ensuring consistency from the primary layer through successive excess layers, reducing gaps or conflicts in coverage language. It is most commonly encountered in commercial [[Definition:Liability insurance | liability programs]], [[Definition:Property insurance | property towers]], and [[Definition:Directors and officers insurance (D&O) | D&O]] placements where multiple [[Definition:Insurance carrier | carriers]] participate across different layers.

⚙️ When an excess carrier issues a follow-form policy, it essentially incorporates the terms of the designated underlying policy by reference. If the primary [[Definition:Insurer | insurer]] covers a particular peril or agrees to a certain [[Definition:Definition of loss | definition of loss]], the follow-form excess layer mirrors that coverage once the underlying [[Definition:Policy limit | limits]] are exhausted. However, follow-form policies frequently include a "differences in conditions" or "differences in limits" endorsement that modifies or restricts certain coverages at the excess level. [[Definition:Broker | Brokers]] and [[Definition:Underwriter | underwriters]] must carefully review these carve-outs to confirm what actually follows form and what does not, particularly around [[Definition:Exclusion | exclusions]] for [[Definition:Cyber insurance | cyber]], [[Definition:Terrorism insurance | terrorism]], or [[Definition:Communicable disease exclusion | communicable disease]].

💡 The appeal of a follow-form structure lies in its simplicity and the seamlessness it brings to [[Definition:Claims handling | claims handling]]. When a loss triggers the primary policy, the insured and its advisors can look up the coverage tower knowing that the same terms generally apply at every layer — avoiding the costly disputes that arise when each carrier uses its own bespoke wording. For [[Definition:Risk manager | risk managers]] and their brokers, assembling a follow-form program also accelerates the [[Definition:Placement | placement]] process, since excess carriers can quote without drafting entirely new policy forms. That said, the insured must remain vigilant: any narrowing amendments on the primary policy automatically narrow the excess coverage too, and any non-follow-form carve-outs can create unexpected coverage gaps at the worst possible time.

'''Related concepts'''
{{Div col|colwidth=20em}}
* [[Definition:Excess insurance]]
* [[Definition:Umbrella insurance]]
* [[Definition:Differences in conditions (DIC)]]
* [[Definition:Policy wording]]
* [[Definition:Layered insurance program]]
* [[Definition:Primary insurance]]
{{Div col end}}