Umbrella and Excess Liability policies provide coverage over the limits of an underlying coverage or the basic insurance policy. These two policies are designed to pay for losses that exceed the insured’s underlying policy limits and also provides coverage which may not have been available under the basic policy as long as it isn’t an exclusion under the broader Umbrella or Excess policy. This type of insurance coverage is to prevent the insured from a potential devastating business loss in the event of a catastrophic event. It is also available to protect your personal exposures.
The basic distinction between Umbrella and Excess Liability coverage is:
Umbrella policies are a type of excess liability that not only provides additional limits but the true “umbrella” will also provide coverage for losses that are not included in the underlying policy. When additional coverage is provided by the umbrella policy, it is usually subject to a self‐insured retention, or retained limit, normally, $10,000.00 to $25,000.00.
An umbrella policy has three basic functions: to provide excess coverage extending the limits of one or more primary policies; to drop down and replace primary coverage once the underlying aggregate limits are exhausted; and to afford broader coverage for additional exposures not covered under the primary policies, subject to a retention limit.
Umbrella policies are usually written to provide excess coverage over commercial general liability, business auto and employers liability. There are ways to protect the excess property values also.
Excess Liability policies provides higher limits of coverage over one or more underlying policies once the underlying limits have been exhausted. “Following form” is similar to Excess Liability, as it provides higher limits of coverage but follows the terms and conditions of the underlying policy. Actually, the excess liability coverage could even be more restrictive than the underlying policies coverage. An excess policy has basically two functions: to provide excess coverage extending the limits of one or more underlying policies; to drop down coverage’s once the underlying aggregate limits have been exhausted.
To check if this is coverage you need please contact your agent at HWP.