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 Worker's Compensation (Employers Liability). 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 construction defect, apartment complex death claims and 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. 

Important Umbrella/Excess Liability Insurance considerations:

• Follow Form: Your umbrella policy should follow the same policy design as the underlying coverage. You don’t want an excess insurance policy containing coverage that's ess broad than the underlying policies
• If you allow your underlying coverage (GL/WC/Auto) to cancel/lapse, you could experience a serious coverage gap. Umbrella coverage will not drop down to cover a gap left by cancelled underlying coverage.