Umbrella/excess liability insurance is designed to provide additional liability coverage that goes beyond the limits of your primary general liability, auto liability, or other underlying insurance policies. It acts as an “umbrella” by extending your coverage and providing an extra layer of protection against catastrophic events or large liability claims that exceed the limits of your primary policies. Here are some key considerations for umbrella/excess liability insurance coverage:
- Coverage Limits: Umbrella/excess liability insurance typically offers higher coverage limits than your underlying policies. For example, if your primary general liability policy has a limit of $1 million, an umbrella/excess policy could provide an additional $5 million or more of coverage on top of that.
- Broader Coverage: Umbrella/excess liability insurance can provide broader coverage by encompassing multiple underlying policies. It may extend coverage for general liability, auto liability, employer’s liability, and other liability exposures, providing a more comprehensive and cohesive insurance program.
- Excess Coverage: The primary purpose of umbrella/excess liability insurance is to provide excess coverage once the limits of your underlying policies are exhausted. It kicks in after you have used up the liability limits of your primary policies.
- Additional Covered Risks: Umbrella/excess liability insurance may provide coverage for certain risks that are not covered by your primary policies. It can include coverage for libel, slander, false arrest, defamation, invasion of privacy, or other specific liability exposures that may not be covered by your underlying policies.
- Legal Defense Costs: Umbrella/excess liability policies often include coverage for legal defense costs. This coverage helps pay for legal representation, court costs, and other expenses associated with defending against covered liability claims.
- Worldwide Coverage: Umbrella/excess liability insurance typically provides coverage worldwide, which is beneficial if your business operates internationally or has exposures outside your primary policy’s geographical limits.
It’s important to note that umbrella/excess liability insurance is not a standalone policy but is intended to complement your underlying insurance coverage.