Excess liability insurance adds an extra layer of protection for losses that exceed the limits of your main policy.
Excess liability insurance (sometimes known as Umbrella Insurance) does not give you more cover beyond your primary policy. But it will provide higher limits on top of what you have.
The purpose of Excess Liability insurance is to close coverage gaps in case the underlying insurance is exhausted of all possible resources.
If your claim exceeds the limits of the primary policy, your Excess Liability policy will kick in, picking up the remaining costs that were not covered by the primary insurance policy.
One of your customers accidentally slips on the floor while visiting your business premises, resulting in a spinal cord injury.
He files a claim against you, and the court decides that you are responsible for the incident.
The injured customer wants a $1,500,000 settlement, but your General Liability insurance has policy limits of up to $1,000,000 per occurrence.
If you have Excess Liability insurance of $1,000,000 or more, you don’t have to worry about the remaining $500,000. Without it, you would have to pay the difference out of your pocket.
How can Excess Liability increase my protection?
Excess Liability Insurance can increase your coverage for:
Umbrella Insurance differs from Excess Liability insurance policy in that Umbrella Insurance can:
If you want to cover claims that are not initially included in your primary policy, you can do it via Umbrella insurance, provided that you have settled the SIR. The SIR is the amount you need to pay before an insurance company responds to a loss.
Example: If you have an Umbrella Insurance policy with a $20,000 SIR, and you need to make a claim amounting to $100,000, you must first pay the SIR of $20,000 after which the insurance company will take care of the remaining cost, which is $80,000.