Skip to main content
search

Excess Liability Versus An Umbrella Policy…

By November 1, 2022November 17th, 2022Business Insurance, Enewsletter, Insurance
Excess liability and umbrella liability are often confused as the same thing, but they’re two different coverage types. 
  • Excess liability Insurance- This is additional monetary coverage that activates when the basic liability policy exceeds its limits.
  • Umbrellas Insurance policy – This is extra coverage over the claims and damages not covered by the existing underlying insurance policy.
In this blog we hope to outline in detail the differences to help you understand both in order to make  better decisions.
 

What Is Excess Liability Insurance?

Liability insurance is an important aspect of your financial plan. It’s a coverage that makes sense, can help protect you in some of the most costly scenarios you may face and it is, in most cases, quite cost effective. Excess liability insurance is coverage provided for the big, unexpected events that can have potentially catastrophic results on your business – from auto accidents to products liability claims. It does not affect the duration or terms of the underlying policy, instead it offers extra limits.  It will protect the business from damages when the claim exceeds the amount of the underlying policy. This can certainly be beneficial for your business if you are operating in a risk-intensive industry.  The policy will activate when the limit of the underlying insurance exhausts.  The industry and risk intensity play an important role in deciding the cost for excess liability insurance.  If you are a small business owner or need auto insurance you may want excess liability insurance. There is an exclusion to the excess liability coverage.  It is limited to one primary policy and excludes coverage for claims that are excluded from the underlying policy.  Excess liability does not cover no-fault medical claims even if the expense falls within the scope of the underlying policy.  Uninsured or underinsured motorist coverage, no fault coverage,  medical expenses, and physical damage coverage are also excluded. The cost of excess liability insurance policies will vary significantly based on the amount of coverage you need and the number of policies overwritten. The larger your company is, the more expensive your insurance premiums will be.

What Is An Umbrella Policy?

Umbrella insurance refers to liability insurance that is in excess of specified other policies and also potentially primary insurance for losses not covered by the other policies. The umbrella policy provides an extra layer of protection to keep your business covered. If ever your standard liability insurance wasn’t enough, your commercial umbrella insurance policy would kick in to help pay for costs that may exceed your other liability coverage limits. Certain aspects of your lifestyle—like owning multiple homes or watercraft, or employing domestic staff—may increase your liability risk and hold the power to threaten your existing wealth, your future earnings, and your future legacy. You may want a personal umbrella policy as it provides coverage beyond the limits of your other insurance policies, or for claims that may not be covered by liability policies. Umbrella insurance generally provides liability coverage for:
  • Injuries
  • Damage to property
  • Certain lawsuits
  • Personal liability situations
Excess liability will provide more monetary limits with the similar term of the original liability policy and is applicable to only one policy.  Umbrella insurance will provide broader coverage than provided by the liability policy and applies to multiple policies.  Sometimes the upper limits of those policies don’t end up covering the costs of an incident that results in an insurance claim. That’s where the umbrella policy comes in. An umbrella policy coverage will be a policy in addition to homeowners, watercraft, and auto insurance. Specifically, a homeowners umbrella policy on top of your existing homeowners insurance protects you in the event of a home-related accident that ends up costing more than your existing homeowners policy covers. A commercial umbrella policy can complete your business insurance package, providing you with extra liability coverage for an affordable premium. Say you owe the claimant $1.5 million, but your standard insurance only covers $1 million. Your commercial umbrella insurance policy would help cover the remaining balance. Commercial umbrella insurance can be a cost-effective way to buy a higher limit of liability coverage. A commercial umbrella policy can be added to general liability, business owners, and commercial auto policies. Starting around $500 annually for $1 million in coverage, a commercial umbrella policy can complete your business insurance package, providing you with extra liability coverage for an affordable premium.

The major difference between the two is that umbrella insurance can be applied when there is no insurance to cover the losses. Excess insurance only protects damages that are protected by another insurance policy that is the primary policy.

 

Contact Us (888-727-6675) for a Free Consultation!
-or- Get a Quote

—

About Gartman Insurance

We are your trusted, family-owned independent insurance agency. Your family, your business, and your possessions are all important to you, but you may not know how to best protect them. We have the experience and local knowledge to navigate the unique risks you face, serving as your insurance advisor. Since 1999, Gartman Insurance Agency has proudly served our customers in Kentucky, Ohio, Indiana, Tennesee, and Alabama, helping them to find the right insurance coverage to fit their needs. Our customers are our priority, and we are always finding ways to better serve them, whether that’s helping them find a better policy or giving them the power of choice when it comes to their insurance coverage.
> Learn More

Tags:

Close Menu