What happens if you’re involved in a claim where you exceed your underlying home or auto limits? If you have excess liability coverage in place, your claim could be covered. Otherwise, you might be left footing a very expensive bill.
But what is excess liability coverage? And how can you decide if it’s right for you? Let’s start with the difference between an umbrella and excess liability coverage.
What’s the Difference Between an Umbrella Policy and Excess Liability Insurance?
Umbrella and excess liability insurance policies act as additional protection above and beyond your primary insurance coverage. In fact, an umbrella is a type of excess liability policy. However, they’re not the same thing.
The only instance where excess liability coverage comes into play is as additional coverage to your primary insurance policy. But if there’s no existing underlying insurance policy, you won’t be protected.
On the other hand, umbrella insurance can provide extra coverage for claims even if you don’t have an underlying insurance policy in place. It can also cover loss types not included in your existing liability policies.
What is Personal Excess Liability Insurance?
A personal excess liability umbrella policy provides coverage for bodily injury, property damage, and certain personal lawsuits and is designed to work on top of your personal lines auto and home policies. It can also cover lawsuits related to slander, libel, false arrest or imprisonment, malicious prosecution, and shock or mental anguish.
Personal excess liability examples include:
- An individual strolling on the sidewalk trips and falls on an uneven section and breaks their hip, which requires extensive medical care to remedy.
- A guest slips on a wet spot near your pool, throws out their back, and requires multiple surgeries to correct.
- A friend is playing with your dog at your home, which gets angry and bites them. Eventually, the bite becomes infected and requires extensive hospitalization to stabilize.
What is Commercial Excess Liability Insurance?
A commercial excess liability policy is designed to provide additional coverage for just one of your underlying commercial policies—typically, your general liability (GL) insurance. It kicks in once you exhaust your underlying limits.
Related: Should Your Business Consider a Commercial Umbrella Policy?
As with personal excess liability, commercial excess liability coverage typically follows the same coverage terms, conditions, and exclusions as the underlying policy. However, commercial excess liability coverage is usually available at much higher limits than personal—frequently up to $15 million.
Examples of commercial excess liability include:
- A kitchen fire causes $750,000 worth of damage to the building you rent for your restaurant. Your underlying general liability policy pays the first $500,000, and your excess liability policy would cover the remaining $250,000.
- After mopping the floor of your business, a customer walks in, slips, falls, and severely injures themselves. Once your GL policy is exhausted, your excess liability policy will cover any remainder.
- A customer drops a heavy item on their foot, causing them to undergo several surgeries, miss weeks of work, and deal with lingering pain and suffering. Here again, once your GL policy is exhausted, your excess liability policy would cover any remainder.
How Much Does Excess Liability Insurance Cost?
There is a multitude of factors that can impact how much you pay for excess liability insurance, including:
- Policy limits, including those found on your underlying policies;
- The industry in which your business operates, including risk exposure;
- The length of time you’ve been in business;
- Your location;
- The insurance carrier.
With this said, a good rule of thumb is that you’ll typically pay about $1,000 per year for every $1 million in coverage for an excess liability policy.
Have Additional Questions About Excess Liability Coverage?
Deciding whether or not to purchase individual or commercial excess liability coverage isn’t always straightforward. The good news is that you can contact the professionals at IHS Insurance Group, and we’ll walk you through the process step by step!
Need a FREE Quote or have questions regarding Excess Liability Insurance Coverage? We have three convenient ways to reach us:
- If you prefer to talk to a licensed agent directly, please call (866) 480-5063.
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