Umbrella vs. Excess Liability: Which Is the Better Option?

Umbrella vs. Excess Liability: Which Is the Better Option?

Liability insurance is a form of general insurance that helps protect the policyholder when someone makes a claim or lawsuit against them. However, liability insurance has liability limits that may require the policyholder to take out additional coverage. An umbrella policy or excess liability coverage is an ideal second step to protect your assets. But do you need it, and if so, which one is right for you?

Our personal lines insurance brokers team at TCE Insurance in Staten Island and Hauppauge, NY, outlines the differences between umbrella and excess liability, below.

Umbrella and Excess Liability Policies

Both umbrella and excess liability policies are extra liability insurance coverages that you add to your existing coverage. Each kicks in when you hit your original liability limit, paying on the remaining balance. If court judgment finds you responsible for paying a large sum during a lawsuit, and you cannot afford to pay out without liquidating your assets, this coverage picks up the costs, safeguarding what you own. 

However, how do you know if obtaining an umbrella or excess liability policy from your insurance company is appropriate for your lifestyle? 

Is an Umbrella Policy Right for Me?

An umbrella insurance policy most commonly enhances homeowner and auto insurance. It also protects in case of bodily insurance and personal injury claims, landlord liability, and property damage. While general insurance might cover these as long as your net worth is less than $1 million, you’ll have to liquidate your assets if someone sues you and your assets are worth more than your coverage.

On the other hand, an umbrella policy won’t protect you if you want to ensure your personal belongings or file a claim for business losses, criminal activity, or broken written or oral contracts. 

Is an Excess Liability Policy Right for Me?

Like an umbrella policy, an excess liability policy extends your general coverage. It gives you a higher limit on your policy to eliminate any coverage gaps you may have with your claims. It also creates additional protection for your assets that would otherwise not receive coverage under your original plan.  

However, when considering umbrella versus excess liability, remember that excess liability requires an underlying policy. It cannot stand alone since it only works to further the coverage you already have. Although you would need to take out numerous excess liability policies to cover each of your existing policies, some prefer it this way since they only pay for additional coverage where they need it.   

Umbrella vs. Excess Liability 

Like umbrella policies, an excess liability policy adds to your general coverage. However, your liability coverage works like an extension because it follows the guidelines of your underlying policy. That means whatever limitations or exclusions your original coverage has, so will your new policy.  

Another main factor in the umbrella versus excess liability debate is that excess liability coverage requires you to purchase individual excess liability coverage for each underlying coverage policy.  

For instance, if you have home and auto insurance, you’ll need to purchase two separate excess liability insurance policies, one for each. Many insurance companies may not offer this option since it offers the same exclusions and risks as the original policy, not adding much to the overall policy.  

An umbrella policy differs because it doesn’t follow your underlying insurance policy’s exclusions. Many prefer this secondary insurance because if you exhaust your original coverage with claims or didn’t receive coverage for a given incident, the umbrella policy kicks in to assist with payments.  

However, umbrella coverages broaden the coverage territory, providing coverage options you didn’t originally have. Umbrella coverage also allows you to add numerous policies to your existing umbrella insurance policy. For instance, you can bundle automobile, home, RV, ATV, and watercraft. 

Insurance Done Your Way!

Sometimes, it feels like you need insurance for almost everything, from expensive jewelry to home and auto to business insurance for your profession. With all of the paperwork from different policies, it’s easy to get confused, not understanding what’s appropriate for you. That’s where we come in. You can trust us to help you receive your liability coverage when you need it most. 

At TCE Insurance Services Inc, one of our experienced and friendly associates will sit down with you, taking note of your risks and coverage needs. With years of five-star services, you can trust our team to help you determine whether umbrella versus excess liability is right for you. Call us at 718-571-8385 in Staten Island or 631-894-9793 in Hauppauge for a free quote!