Umbrella / Excess

Excess Liability Insurance provides protection for catastrophic liability losses. It helps protect your company from major claims that could ordinarily put you out of business. One common type of Excess Liability Insurance is the commercial umbrella policy. It goes above and beyond your General Liability, Auto Liability, and Employers Liability coverage. Umbrella coverage starts paying when a covered loss depletes the per occurrence or aggregate limit of the primary policy.

For example, many businesses’ most significant liability exposure is caused by employees driving on work-related business. If you or an employee are negligent and cause bodily injury or property damage, the cost could be in the millions. An umbrella policy provides for defense costs and pays damages when at-fault accidents reach that magnitude.

Who needs excess insurance coverage?

Serious claims can easily go beyond $10 million, so all businesses should have excess liability protection. Unfortunately, most small businesses are under-insured. Some of them carry modest umbrella coverage, which may not be enough. Fortunately, excess liability insurance coverage is relatively inexpensive for the limits of coverage provided. The umbrella liability policy represents an efficient use of premium dollars.

Important Excess Liability Insurance considerations:

  • Follow form: Your umbrella policy should follow the same policy design as the underlying coverage so the policies complement one another. Both policies should fit together like a hand in a glove. You don’t want the excess insurance policy to contain coverage that is less broad than the underlying policies.
  • Maintain underlying limits: If you allow your underlying coverage to lapse, you could experience a serious coverage gap. Umbrella coverage will not drop down to cover a gap left by cancelled underlying coverage.