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Simple English definitions for legal terms
following-form policy
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A quick definition of following-form policy:
An insurance policy is a contract between you and an insurance company. It's a document that explains what the insurance company will cover if something bad happens to you or your property. There are many different types of insurance policies, like ones that cover accidents, property damage, or even life insurance. Insurance companies use a process called rating to decide how much you should pay for your policy, which is called a premium. Sometimes, several insurance companies will work together in a group called an insurance pool to share the risk of covering certain things.A more thorough explanation:
A following-form policy is a type of insurance policy that adopts the terms and conditions of another insurance policy. For example, if a company has a primary insurance policy and wants additional coverage, they can purchase a following-form policy that mirrors the terms of the primary policy. This type of policy is often used in excess liability insurance.
For instance, if a company has a general liability policy with a limit of $1 million and wants additional coverage, they can purchase a following-form policy with a limit of $2 million that mirrors the terms of the primary policy. This way, if a claim exceeds the $1 million limit of the primary policy, the following-form policy will kick in and cover the excess amount up to the $2 million limit.