EXAMPLE OF EXCESS LIABILITY POLICY COVERAGE GAPS AS RESPECTS DEFENSE COSTS

Policy Limits:

        Policy Type       Aggregate Limit   Defense Costs Covered
    Primary (underlying)    $1,000,000          In Addition
    Excess Liability        $4,000,000          Within Limits

Assuming First Loss:

        Indemnity:               $1,000,000
        Defense Costs:           $  200,000
        Total Loss:              $1,200,000

        Primary Policy Pays:     $1,200,000 total

        The primary policy limits are now exhausted.

Assuming Second Loss:

        Indemnity:               $3,500,000
        Defense Costs:           $1,500,000
        Total Loss:              $5,000,000

        Excess Policy Pays:      $4,000,000 total
                                 (including $3,500,000 for indemnity
                                  and $500,000 for defense costs)

        The Excess Liability policy limits are now exhausted
        and the insured is short $1,000,000 in coverage!

• The True Umbrella vs. Excess Liability Policy