What is the term for the amount an insured must pay when underlying coverage does not cover a claim under an umbrella policy?

The term for the amount an insured must pay when underlying coverage does not cover a claim under an umbrella policy is referred to as self-insured retention. This is a specific feature of umbrella insurance policies where the insured is responsible for a certain amount of loss before the umbrella policy comes into effect. Essentially, self-insured retention operates as a threshold that must be met, and once it is satisfied, the umbrella policy can provide coverage for additional amounts above that level.

Understanding self-insured retention is crucial for policyholders because it highlights the insured's financial responsibility before insurance coverage kicks in. This amount is not an additional premium but rather a portion of the risk that the insured chooses to retain. It operates in conjunction with the underlying insurance policies, which may not provide coverage for certain claims.

In contrast, other options such as premium refer to the cost of purchasing the insurance policy, deductible pertains to the initial amount that must be paid on a claim before the insurance starts paying, and excess coverage generally means insurance that pays for losses beyond the policy limits of the primary coverage. Each of these terms has a distinct meaning and application within the insurance context, but only self-insured retention specifically addresses the situation outlined in the question.