Which type of excess insurance controls loss severity by placing a cap on losses arising out of a single occurrence?

• A. Aggregate Insurance
• B. Umbrella Insurance
• C. Primary Insurance
• D. Specific Insurance

Answer: (B)

Excess liability coverage is designed to respond when damages exceed the limits of the primary policy. When a type of excess insurance places a cap on losses from a single occurrence, it directly controls how large a loss can be for that one incident.Umbrella insurance sits above underlying policies and provides high limits for each claim, effectively capping what can be paid for a single event while also filling gaps in primary coverage. This per-occurrence cap helps manage loss severity from a single accident. Aggregate insurance, by contrast, limits the total paid for all claims in a policy period rather than the amount paid for one event, so it doesn’t address the severity of an individual incident the way umbrella does. Primary insurance is the base layer, and Specific insurance isn’t the standard term used to describe this per-event cap mechanism.