Have you ever wondered what’s the difference between excess liability and umbrella policies? They are often confused as the same thing, but in fact, they’re two different coverage types. Excess liability covers a loss above the limits of your primary insurance policy. Umbrella liability offers higher liability limits, while also providing coverage where your original policy might not.
Excess liability is all in the name: it offers protection that exceeds the limits of your basic liability policy.
For example, you have a general liability (GL) policy for $1 million. Then, you decide to purchase an excess liability policy for $500,000. This excess protection would be effective in the event you make a claim in which the losses exceed the $1 million coverage from the original GL policy.
The most important thing to remember is that it only offers additional coverage to your basic insurance policy and provides additional financial insurance security. It doesn’t protect you if you don’t have an original GL policy.
An umbrella policy is not identical to excess liability, but rather is a form of excess liability that serves you in similar ways. Umbrella liability provides extensive coverage for a claim in which there is not an existing original insurance policy.
For example, you are in a car accident in which you are responsible for the injuries caused to another person. You have a $250,000 limit on your auto coverage policy. The injuries and car damages are not enough to cover both the medical expenses and totaled vehicle. An umbrella policy would benefit you. It would kick in and help cover the additional expenses your initial policy cannot cover.
Both excess liability and umbrella policies are crafted to be an extra and additional layer of protection that goes beyond your primary insurance policy. If you are interested in an umbrella policy or want to review your excess liability policy, contact your Hertvik Insurance Agent today.