Following Form
An excess policy that adopts the same terms, conditions, definitions, and exclusions as the underlying policy it sits above.
What It Is
A following form policy is an excess liability policy that adopts and follows the same terms, conditions, definitions, and exclusions as the underlying (or immediately underlying) policy. The excess policy does not have its own independent coverage provisions—instead, it mirrors the underlying policy's coverage structure and simply extends the limits higher.
The advantage of following form is simplicity and consistency. There are no conflicts between coverage terms at different layers, and claims adjustment is straightforward because the same coverage language applies throughout the tower. If the underlying policy covers a claim, the following form excess covers it too (once underlying limits are exhausted). If the underlying excludes it, the excess excludes it as well.
Some following form policies follow the underlying 'except as otherwise provided,' meaning they generally follow form but may include their own exclusions or limitations that differ from the underlying. These modifications must be carefully reviewed because they can create unexpected gaps in the excess layer.
Why It Matters for Brokers
Brokers building liability towers must verify whether each excess layer truly follows form or has its own modifications. A following form excess that adds an exclusion not present in the underlying policy creates a gap at that layer. This is especially important for complex risks like construction, manufacturing, or transportation where excess layers frequently come from different carriers with different appetites and exclusion preferences.
Real-World Example
A general contractor has a $2M primary CGL with no residential construction exclusion and a $10M following form excess. The excess policy follows form 'except as otherwise provided' and includes a residential construction exclusion in its own terms. A $6M claim arises from a residential project. The primary CGL pays $2M. The following form excess denies the remaining $4M because its residential exclusion applies, even though the primary had no such exclusion. The contractor believed they had $12M in coverage but actually had only $2M for residential work.
Common Mistakes
- 1Assuming 'following form' means identical coverage without reviewing the excess policy's own exclusions and modifications.
- 2Not comparing the excess policy's exclusion list against the underlying policy to identify any exclusions added at the excess level.
- 3Failing to update the underlying policy information with the excess carrier when the primary policy terms change at renewal.
How brokerageaudit.com Handles This
brokerageaudit.com's Policy Checker compares the exclusion and coverage terms of each following form excess policy against the underlying policy. The system highlights any differences—exclusions added, definitions changed, or coverage limitations unique to the excess layer. This automated comparison prevents the common mistake of assuming following form means identical coverage.