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Is Umbrella Insurance or Excess Liability for You?

A personal umbrella policy is a type of insurance that provides liability coverage over and above your automobile or homeowners insurance policy.

Many people say that Umbrella Insurance and Excess Liability are the same thing.However, they are not the same policy and there are many differences between the two.

Today we will help you understand the two different policies and which one would work for you.

Excess Liability

This is a type of liability insurance that provides coverage when an underlying liability policy reached its limits. The way that Excess Liability works is like this: If you were liable for $1.5 million in damages and your insurance only covers $1 million, you could claim on excess liability to cover the $500,000 left over. However, excess liability can only be applied to one underlying policy, which means that they cannot use the coverage toward any other policy.

Umbrella Insurance

Umbrella Insurance is a type of excess insurance, but not the same. The added benefits of Umbrella Insurance as opposed to excess liability are being applied to multiple underlying liability policies.

To better understand how a personal umbrella policy works, here's an example provided by Allstate Insurance:

If you're at fault in a car accident that injures another driver, you're regular automobile insurance may cover the other driver up to the limit you selected, say $250,000. But what happens if that limit is not enough to cover the other driver's resulting medical bills?

If the other driver's injuries are severe, you may be legally responsible for damages beyond the $250,000 your car insurance policy covers. And, if he sues you, your personal assets could be at stake. Imagine if that injured driver were a surgeon or another highly paid professional. What if the accident you caused resulted in an injury that kept him from doing his job for six months? Suddenly, he's suing you for $1 million to cover the six months he's away from work.

Your automobile policy's liability coverage may pay for up to $250,000, but where would you come up with the remaining $750,000? A personal umbrella policy can help cover the additional costs when your standard insurance policy isn't enough. An umbrella policy could provide the additional coverage you need so that you don't get stuck trying to pay the remaining balance yourself. This extra policy could help protect your bank account, home and other personal property.

Excess Liability, therefore, comes with many more restrictions when you attempt to go over the limits of the underlying liability policies. Umbrella liability gives much more freedom by providing additional limits over your liability. They also have the advantage of broadening the business insurance liability so that gaps in coverage get completely eliminated. Are you unsure of which one would work best for you, based on your situation? Talk to us today about your options. We can guide you through both and help you gain a better understanding based on your situation.

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A.G. Assanti & Associates, PC

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