Commercial Umbrella Insurance And Excess Liability Insurance | What’s the Difference?

Business owners should always have enough liability insurance coverage for themselves. This can help them protect themselves against any damages. However, there are certain limits to insurance policies. When that limit is reached, an insurance policy cannot give the protection that is needed.

That is when excess liability insurance and commercial umbrella insurance come into play. While the coverage options in these two types have many similarities, there are also certain differences. Let’s take a look at how these insurance policies work and their key differences. 

What is Excess Liability Insurance?

This is also known as an excess insurance policy and is a form of insurance that has limits. It provides further protection that goes beyond the underlying liability policy that a person has. The main purpose of this policy is to cover those extra gaps and give further protection if the insurance policy is exhausted. To understand this in layman terms, excess liability insurance is an insurance plan for one's insurance. It can help guarantee that a person is still covered under excess liability insurance even if the insurance policy has reached its potential. 

What is important to note is that one can only use excess liability coverage with one policy. So, for example, if a person has many insurance policies through one company and has excess liability on their car insurance, it does not carry forward their other insurance policies. Instead, it will be applied specifically to their car insurance only. If they want this for their home insurance, they will need another excess liability policy for that. 

Who Needs Excess Liability Insurance? 

Not everyone needs an excess liability insurance policy. This is only needed if a person has many assets or a lot of property. Only then do they need that extra protection for themselves. If a person has a lot that they have to lose, this insurance policy can be extremely beneficial. People who live in areas where there is a high risk to their homes can use this policy, and it can help them. For example, if you live in an area with a high risk of flooding all year round, this policy can prove very beneficial for covering flood damage.

What Is An Umbrella Insurance Policy?

Umbrella insurance is a policy that gives further liability coverage over the current insurance policy. This option is one that can follow an auto insurance policy but at the same time also adds to other policies like homeowner and watercraft insurance. The insured can protect themselves from a large liability claim by having this policy. 

This policy comes into play mainly when the insured has reached the underlying liability limits. Bodily injury claims, personal injury claims, property damage, and landlord liability claims are all covered under this umbrella insurance policy. However, personal belongings, business losses, and criminal acts are not covered under this policy. 

Who Needs an Umbrella Insurance Policy?

If you have certain assets that you need to protect, then you need this policy. When your insurance policy has reached its limits, this insurance policy can give you the coverage you need. The idea is for this insurance policy to safeguard your assets. So if you have a lot of assets in your name, then it is ideal for you to have this policy since it can help you protect those assets in the best way. 

Many insurance companies recommend that you only take this policy if your net worth is over $1 million. This is also the minimum liability amount on these policies. This insurance is considered to be great for people whose assets ate worth over what they have in liability coverage for their home or auto insurance policies. 

Key Differences Between Commercial Umbrella Insurance and Excess Liability Insurance 

While the terms are used interchangeably at times, it is imperative to understand that they are different from each other. Excess liability insurance gives extra coverage for only one of the various liability insurance policies you may have. Most people get this excess coverage for general liability insurance. 

On the other hand, commercial umbrella insurance provides further coverage for many different liability insurance policies. It comes in when a policy tends to reach its limit. In other words, umbrella insurance can extend the coverage territory. In contrast, excess liability insurance gives coverage that is over the limits of regular liability insurance. Still, at the same time, it does not give as much coverage as an umbrella insurance policy. 

All insurance companies do not offer excess liability coverage. This is mainly because the policy gives coverage for the same risks as the underlying policy, but there are some exclusions to it as well. An umbrella insurance policy comes with a wider range of liability coverage options. For instance, if you have a premises liability insurance plan and take excess coverage, you will get further protection. If a guest gets hurt on your business property, then you will have coverage for that as well. Excess liability insurance does not provide further coverage for other claims if the insurance policy does not cover that. An umbrella insurance policy is broader, mainly. 

What Should You Do When Getting Umbrella Insurance or Excess Liability Insurance in Mexico?

You need to first evaluate all the assets that you have and their monetary value to understand better whether or not you need either of these policies. Speaking to your insurance provider is always a great idea, as well. They can guide you better and can help you understand whether or not you need any of these. 

Sometimes, the line of difference between these two types of insurance can get blurred, which is why you need to first understand the differences before you get one for yourself. The idea here is that you cannot predict the future. So, it is always best to ensure you have adequate coverage and prepare for any risks beforehand. You do not need to wait too long to get the coverage that you need! Find out about the right plan from a reputed insurance provider and get it immediately to secure your assets!