New York State Real Estate Salesperson Licensing Exam

What is the name of the policy that provides extra liability coverage beyond the primary policy?

1. Comprehensive policy

2. Umbrella policy

3. Supplemental policy

4. Excess policy

The correct answer is: Umbrella policy

The policy that provides extra liability coverage beyond the primary policy is known as an umbrella policy. This type of insurance offers an additional layer of protection that kicks in once the limits of the underlying policies—such as homeowners, auto, or other types of liability insurance—have been exhausted. Umbrella policies are designed to cover a variety of liability claims, which can include things like personal injury or property damage, thus providing peace of mind for policyholders with significant assets to protect. In contrast, a comprehensive policy typically refers to a type of insurance that covers a wide range of risks but does not specifically denote the additional coverage that an umbrella policy provides. A supplemental policy is usually designed to provide additional coverage for specific situations or conditions that are not fully covered under the primary policy, but it does not encompass the broad liability coverage an umbrella policy offers. An excess policy, while it can provide additional coverage, usually applies to specific types of liability insurance and is typically linked to a specific primary policy rather than providing blanket coverage across various potential liabilities.