15 Nov Umbrella Coverage vs Excess Coverage
Contrary to what you may have heard or read before, umbrella coverage and excess coverage are not the same. Still, the terms are used interchangeably everywhere you look. It is true that umbrella coverage and excess coverage have striking similarities. However, there is an important distinction between these two.
Umbrella and excess coverage both provide an extra layer of protection. Both policies can provide this level over a variety of primary or underlying forms. This coverage is triggered when the primary protection’s limits have been reached.
Both umbrella and excess coverage can be applied to the following policies when their limits have been reached:
- Employer’s Liability Insurance.
- Commercial Auto / Hired & Non-Owned Auto Insurance
An umbrella, theoretically, supplements its excess coverage in a slightly different way. It also provides coverage for miscellaneous and unidentified loss exposures. Since there isn’t a source of primary protection for these exposures, a form of high deductible, called a self-insured retention, is applied to these losses. An excess policy does not provide broader coverage. However, it only supplements whatever coverage exists in the primary layer. It is becoming increasingly commonplace that such coverage is provided on a following form structure. These forms are written so that it tracks precisely with the coverage and exclusion provisions of the underlying policies.
So, if you seek additional coverage, be sure to pay attention to what is stated in your insurance forms. The term umbrella could be used even when the form does not provide true umbrella coverage.
Contact AWS Insurance today for a free consultation about our business insurance coverage policies and what we can do for your needs. Our team is happy to assist with any of your questions or concerns involving your business insurance. Be sure to speak with an AWS insurance professional to get the coverage you need!