The specific excess policy shall not have a retention level above ______ nor an upper limit of less than ______________.

• A. $500,000; $25,000,000
• B. $1,000,000; $10,000,000
• C. $750,000; $20,000,000
• D. $250,000; $5,000,000

Answer: (A)

The key idea is how a specific excess policy works in relation to retention and limit. A specific excess policy sits above the retention (the amount the insured must pay before the excess policy kicks in) and has a defined upper limit that the insurer will pay. The rules here require that the retention not exceed 500,000 and the upper limit not be less than 25,000,000. This means the insured should not have to bear more than 500,000 before the excess coverage applies, and the excess coverage must provide at least 25 million in protection. The pairing that meets both of these requirements is a retention of 500,000 with an upper limit of 25,000,000. The other options either set the retention too high or the limit too low to satisfy the minimums.