Excess liability and umbrella liability are often confused as the same thing, but they’re two different coverage types. Excess liability covers losses above the limits of your primary insurance policy. Umbrella liability offers higher liability limits and also provides coverage where your underlying policy might not. Let’s breakdown even further the differences between the excess liability and umbrella policies to give you a better understanding of how they work to protect you.
Excess Liability Policies
A trick to remember excess liability is all in the name, excess liability insurance offers protection that exceeds the limits of a basic liability policy.
For example, if you have a general liability policy for $1 million, then you decide to purchase an excess liability policy for $500,000. This protection would be effective when you made a claim where the losses exceeded the $1 million coverage you have from the initial policy.
The most important thing to understand about excess liability coverage is that it only offers additional coverage to your basic insurance policy and provides you with more financial insurance security. It does not protect you if there is no existing underlying insurance policy. It is also worth noting that sometimes excess protection can have more restraints than current insurance policies.
Umbrella Liability Policies
Umbrella liability insurance is not identical to excess liability insurance, but it is a form of excess liability and serves policyholders in similar ways. Umbrella liability provides extensive coverage for claims when there is not an existing insurance policy.
For example, you are responsible for a car accident that causes injuries to another person. You have a $250,000 limit in auto coverage, but the damages and injuries are not enough for medical expenses and the totaled vehicle. This is when an umbrella liability policy kicks in and will help cover additional expenses when your basic insurance policy doesn’t have enough to help cover the damages.
Umbrella and excess liability insurance policies are crafted to be an extra layer of protection that goes a step further than your primary insurance policy. Though they may seem like they’re the same thing, they are different. If you’re interested in obtaining an umbrella insurance policy or want to take a look at your excess liability policy, contact an agent at TGS insurance. Our agents will take a look at all of your existing policies and provide money-saving solutions that keep you protected.
Are excess liability and umbrella insurance the same thing?
No, 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.
What is a true umbrella policy?
A true umbrella is an open-risk policy, which means if it’s not particularly excluded, then it’s protected.