Purchasing an insurance policy may bring you peace of mind, but your liability policy may leave expensive gaps or exclusions. There are coverage limits as well, and resolving an incident could exceed what your insurance policy provides. When this happens, an excess liability or umbrella policy could help make up the difference.
Knowing the Difference
Though the terms are sometimes used interchangeably, there are noted differences between excess insurance vs umbrella coverage. With umbrella policies, the insured is given higher liability limits as well as a broad scope of coverage for the policy itself. Umbrella coverage can usually fill in gaps like coverage territory, such as moving from a national scope to a worldwide application. With an excess liability policy, the insured is provided additional coverage beyond the financial limits established by the underlying policy. However, because the financial limits are extended, the policy may be more restrictive when written.
Either policy you choose, you need to carefully read through to find out inclusions and exclusions. The policies themselves don’t follow a standard format, making it easier for you to overlook a crucial detail or simply assume a situation is covered.
The distinction between the two policies can become blurred, especially when agents are talking to you about the benefits of carrying additional coverage. With this information, you should have a better understanding of what policy will best cover your liabilities.