Excess Liability / Umbrella Insurance

The lines between Excess Liability and Umbrella Insurance can be a little blurry.  Yes, they are similar but they are actually two different policies.  So, let's clear up the clutter!

 

First, why would you need additional liability coverage over and above your primary coverage? A catastrophic lawsuit or event can far exceed the limits of your primary or underlying coverage and can threaten the future of your business.  Or, maybe you are required to carry higher limits for a contract you have been awarded.  This is where Excess Liability and Umbrella coverage come into the picture.  As the old adage states, "You don't have to be a millionaire to be sued like one."

 

So, really...what is the difference? 

 

Excess Liability:  This policy provides additional limits of insurance over and above your underlying coverage.  It follows the exact same coverage (i.e. exclusions, endorsements, limitations) as the underlying coverage and provides excess coverage of those policies it goes over.  It can actually be more restrictive than the underlying policies themselves. 

 

Umbrella:  This policy not only provides additional limits of insurance, but also provides additional coverage than the underlying policies.  In essence, it helps broaden your liability coverage. Current carriers can restrict the types of policies in which an umbrella policy can cover.