Drop-Down Coverage
What this clause says
In the event of the financial impairment or insolvency of an insurer providing Underlying Insurance, this Policy shall not drop down but shall apply as if such Underlying Insurance were fully collectible.
What this actually means
Drop-down is what happens to your excess layers when an underlying carrier fails to pay. The wording above is the common position: the excess does not drop down, and the failed layer is treated as though it had paid, which means you fund it.
What it means for an operator
Most senior care liability sits on surplus lines paper, which is generally outside state guaranty fund protection. That makes carrier insolvency a real rather than theoretical exposure, and the standard non-drop-down wording means an insolvent primary leaves you paying the primary layer before the excess attaches. Ask for a drop-down provision where the market will grant one, and where it will not, treat carrier financial strength as a purchasing criterion rather than a formality. Set a written minimum rating for every participant in the tower, not only for the primary.
Why the Policy Checker does not score this
This term is worth understanding and cannot be checked from a declarations page. There is no single field that would answer it, and scoring it from an assumption would produce a confident wrong finding, which is the one thing a tool like this must never do. It is defined here and left out of the check.
See this in your policy
Check this term against your own program.
Run the Policy CheckerRelated clauses
Common questions about this clause
- What happens if our surplus lines carrier becomes insolvent?
- Does my excess policy follow form over abuse coverage?
- What is a quota share layer in a senior care excess tower?
- Does a single-community operator need excess liability at all?
- Does a commercial umbrella sit over senior care professional liability?