If Mike's underlying liability policy expired but his excess liability policy is active, how will a loss be handled?

In the scenario where Mike's underlying liability policy has expired but his excess liability policy is still active, the handling of any potential loss would be impacted by the lack of an underlying coverage. Excess liability policies are designed to provide coverage above a specified limit of the underlying policy, and they depend on the existence of that underlying coverage in order to kick in.

When the underlying policy is expired, the excess policy does not have a base layer of coverage to supplement. Consequently, the absence of an active underlying policy leads to a situation known as nonconcurrency, where the two policies (the expired underlying and the active excess) are not aligned in terms of coverage. Since the excess policy cannot operate independently without an active underlying layer, it will deny the claim, as it is contingent upon the underlying policy being in force.

Understanding this concept is crucial. It highlights the importance of maintaining concurrent coverage in both the underlying and excess policies to ensure that liability claims can be fully addressed. It is essential for policyholders to monitor the status of their insurance to avoid gaps that could lead to problematic scenarios in the event of a loss.