As a business owner, protecting your company from potential risks is essential, and commercial insurance is a vital tool in doing so. However, understanding the different types of coverage can be confusing. Two common types of additional coverage are excess liability insurance and umbrella insurance. While they both provide extra protection, they have key differences that can affect which one is right for your business.
Let's break down these types of coverage to help you decide.
Excess liability insurance provides additional coverage above the limits of your primary commercial liability policy. If you reach the coverage limit of your standard policy, excess liability insurance steps in to cover the remaining costs up to its limit. This coverage is meant to protect businesses from large claims that exceed the limits of their existing policies.
For example, if your general liability policy covers up to $1 million and you're faced with a $2 million judgment, excess liability insurance can cover the additional $1 million. However, it only extends coverage for the same risks your primary insurance already covers.
Umbrella insurance offers a broader scope of coverage than excess liability insurance. It increases the limits of your primary commercial policies (such as general liability, auto, or workers' compensation) and provides coverage for risks that may not be included in those policies. Umbrella insurance is designed to fill in the gaps in your coverage.
For example, it can cover incidents not included in your general liability policy, such as defamation claims or damages caused by rented property. It provides more comprehensive protection and can even extend coverage to incidents that exceed the primary policy's limits.
Choosing between excess liability and umbrella insurance depends on your business's needs. Excess liability insurance may be appropriate if you face high-risk activities and large claims. However, umbrella insurance might be a better choice if you want more comprehensive coverage that protects against a broader range of risks.
Understanding the differences between excess liability and umbrella insurance is key to making the right decision for your business. Both options provide additional coverage, but umbrella insurance offers a broader scope of protection.
At Knight Insurance Services, we help businesses find the right commercial insurance solutions. Contact us today at (818) 662-4200 to discuss your coverage options and ensure your business is fully protected.