Following form
The principle by which an excess policy adopts the terms, definitions and exclusions of the underlying policy, unless expressly varied, so that the whole insurance tower responds the same way.
In an insurance tower made of a primary policy and several stacked excess policies, each layer is written by a different insurer, often in a different market. The following form clause provides that the excess policy applies on the same terms as the underlying policy, adopting its definitions, covers and exclusions, and differing only in its limit, attachment point and any expressly stated variations. The principle ensures the tower's consistency: a loss covered at the primary level must also be covered above, without the insured finding exclusions in the upper layers that did not exist below. In practice consistency is never perfect. Excess insurers often add their own exclusions, on cyber, pollution, communicable disease or sanctions, and a so-called following form policy can carry several pages of variations. The broker's and underwriter's job is to spot these variations, because they create the most expensive coverage gaps, leaving the insured uncovered above a layer that has actually paid.
Textbook case: a company has a 100 million liability tower: 10 million primary, then four following form excess layers. The third layer added a cyber exclusion absent from the others. After a cyberattack causing 60 million of third-party claims, the first two layers pay, the third declines, and the insured bears that layer's 20 million.
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