Umbrella Liability and Excess Liability Coverage

Umbrella Liability Coverage

Umbrella liability insurance increases the coverage amounts for most all existing liability policies held by a company.  This coverage provides an additional layer of coverage when a claim exceeds an underlying policy’s insurance limits. As an example, suppose your General Liability policy provides $1,000,000 limit in coverage, but your claim settlement calls for $1,500,000; your umbrella policy would cover that additional half-million dollars.  Read more…

Excess Liability Coverage

Companies that add a new unit or operation may opt to purchase additional insurance protection for that particular area of the business. Excess liability insurance provides additional protection that supplements a company’s existing single policy coverage. In other words, whatever per person or per accident coverage exists through a company’s existing underlying policy increases according to the terms listed in the excess liability policy. Since the added coverage only supplements whatever existing coverage is in place, any exclusions, deductibles or limitations listed in the original policy remain in force. In addition, any excess coverages only apply to the original policy, meaning that any other liability policies a company may have remain unchanged.  The excess liability coverage usually follows terms and conditions of the primary general liability coverage.

There is a distinct difference between Umbrella and Excess Liability

Umbrella insurance coverage differs from excess insurance in terms of being a comprehensive addition to a business’s existing liability coverage. In addition to supplementing a company’s existing liability coverage as excess insurance does, umbrella coverage increases the coverage amounts for most all existing liability policies held by a company. This means that all areas of a company’s operations receive additional coverage as opposed to just one particular unit or area of a business. Umbrella coverage also fills in or covers any exclusions, limitations and deductibles found in a company’s existing underlying policies. As a result, umbrella insurance coverage differs as far as price goes when compared to excess insurance; umbrella coverage is more costly.

Why do I need Umbrella Liability or Excess Liability?

The primary feature of umbrella protection is an additional amount of liability insurance that is excess over “basic” general liability, automobile liability, and employers’ liability coverage which is section 2 of a workers’ compensation policy.

Similarly, the need for excess liability is warranted when there is more exposure on a single policy.  It is important that the Umbrella or Excess policy period be concurrent with your underlying policies to avoid potential coverage gaps or shortfalls.

A critical area is the additional coverage for auto accidents that occur while an employee is driving on company business. The catastrophic results of car/truck accidents on interstate highways and local roads underscore the need by every business for high limits of liability insurance.

How much Umbrella Liability or Excess Liability Insurance should I purchase?

There are several metrics used to decide on adequate limits: total assets, market cap, nature of your business, historical claims in your business and your appetite for risk. There is no standard limit. Typically limits layers are 5, 10, 25, 50 & 100 million dollars. The initial 5 million dollars will be the most expensive layer. Some buyers carry higher limits when the pricing is down in a soft market and scale back when the hard market is evident.

Does my Umbrella or Excess company have to be the same as my primary General Liability provider?

Not at all. In some cases there may be a pricing advantage to have the first layer with your primary general liability carrier. In other cases, your primary carrier may not be willing to take on the additional layer of risk. As the limits get higher, pricing may be more efficient with multiple carriers in 5 million dollar increments.

Important Considerations.

There is no standard umbrella policy. Therefore, coverage comparison is a must. Our staff has considerable commercial insurance experience.  We also have the knowledge and industry contacts necessary to tailor a program that meets your needs at a competitive cost.  Key areas of comparison are:

  • Exclusions
  • Retentions; How much risk do you want to retain?
  • Whether a follow-form is offered over unusual underlying exposures
  • Limits
  • Defense Cost (in or outside of policy limits) This is critical because a lengthy Defense may exhaust the policy limits and leave no coverage for the actual damages.
  • Pays on behalf or reimburses. Do you have the ability to pay the claim and then wait to be reimbursed by your carrier?

Other Business Insurance Coverages

Let our experienced licensed representatives answer your questions on Commercial Umbrella Insurance or Excess Liability and help you find the coverage you need.  Click here to see a list of the major coverages we offer.  If there is something not listed, just ask and we will provide you with the details.  The Armstrong Company Insurance Consultants understands the business insurance needs of our customers.  The right coverage for you is unique – contact us at 866-990-9286 or Request a Quote online today to find out how to protect your business and your future with the right insurance.  We are here to work for you!


Get a Quote or call for a quote at 866-990-9286