Umbrella Insurance or Excess Liability 

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Umbrella and Excess liability policies cover excess claims against your existing insurance policies

Excess liability only covers excess claims for a specific policy

An umbrella policy can cover excess claims against multiple liability policies 


Although excess liability and umbrella liability are often confused for one another however, they are not technically the same term. 

While both policies provide some extra coverage once your regular policy reaches its limit, umbrella liability may provide coverage to more than one of your liability policies.

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What Are Umbrella and Excess Liabilities? What Do They Cover?

Its important you understand the distinction between an umbrella liability policy and an excess liability policy because if you don't, you may find out you don't have excess liability coverage when you thought you did. 

An Umbrella liability is a policy that extends the regular limitations of a liability insurance plan.

It covers claims that would be more expensive than the standard policies and covers extra costs.

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Umbrella liability does not add more comprehensive coverage than the original policy; it simply adds more coverage on top of the original policy. 

Excess liability works similarly to umbrella liability, but only covers one specific policy. 

Excess liability is used more for individuals or small businesses with only a few insurance policies.

Generally, the excess is applied to the policy with the highest risk. 

Both of these liability insurance policies will have the same terms as your original policy and will activate when your standard policy’s limit is reached.

For example, if out-of-pocket expenses are higher than the policy covers or the policy is limited in how many times it can cover an accident, excess or umbrella liability can step in to protect them. 

Dodo Definitions

insurance terms explained:

Independent Insurance Agency:  You can buy insurance from an indendent agency but they represent other companies (typically several).  For example, an independent agent who works for Acme Insurance Agency might sell you an auto insurance policy insured by Travelers Insurance.

What Types of Businesses Need an Umbrella or Excess Liability?

Excess liability and umbrella liability are slightly different, but they function in much the same way.

By covering extra funds, these kinds of liability insurances take care of situations where court fees or accident coverage could put a company under. 

It’s a good idea for most businesses that statistically risk big accidents to have some form of excess liability or umbrella liability.

Contractors like plumbers and painters and heavy equipment operators should all consider one of these policies. 

Pretty much, any business that is exposed to liability should carry an umbrella policy, such as car haulers, architects, and Charter boats

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One little know benefit of a home daycare business is that most insurance companies will add an umbrella to their existing homeowner's policy

Customer accidents can turn into lengthy and expensive battles. Excess or umbrella liability is beneficial for small businesses without a lot of extra capital. 

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