Claims that are greater than the limits of a primary insurance policy are covered by excess coverage insurance.
There are many types of business insurance available to you as a business owner, such as general liability insurance, commercial auto insurance, and commercial property insurance. Unfortunate circumstances can compromise your financial security if you do not have the right coverage.
However, the problem with exceeding the limits of your underlying policy is that you might not realize what might happen.
It is common for policyholders to be responsible for any remaining damages when their policy stipulations do not cover the incident or claim. The financial resources of your company could be strained if your company faces a major lawsuit or judgment.
In addition to these policies, contractors can also purchase excess liability insurance, which expands liability limits. However, there are several important differences between the two policies.
What is Excess Liability Insurance?
A primary liability insurance policy carries a maximum limit, but excess liability insurance covers claims above that limit. This policy complements commercial general liability policies (CGLs), commercial auto policies, and workers' compensation employers' liability coverage.
As a result of adding this policy to your business's existing policies, your insurer will cover more of your general liability. There are also times when umbrella policies include excess liability coverage.
In addition, excess liability insurance is known by a variety of names like excess coverage insurance and commercial excess liability insurance.
Until the limits of the underlying policy have been exhausted, excess liability insurance sits in the background. A liability insurance policy that exceeds the underlying policy's limits will kick in once the underlying policy reaches its limits.
Once the excess liability insurance policy has been activated, its policy limits will be paid. A liability insurance policy that limits your company's underinsurance exposure will keep you from paying out of pocket in the event of an accident, but it doesn't guarantee you won't.
The Difference Between Excess Liability Insurance & Umbrella Insurance
A policy that adds liability coverage to a specific policy is known as an umbrella or excess liability policy.
Excess liability policies usually cover only one underlying policy, which is usually a general liability but can be commercial auto as well. Whereas an umbrella policy typically covers more than one underlying policy.
Many types of liability policies can be extended with umbrella coverage. It covers losses that aren't covered by your homeowner’s insurance or other policies, like those that fall outside the umbrella policy.
A deductible isn't required on excess liability insurance. Since your policy would have already met your deductible, you would already be out of pocket for it. Your insurer might not start paying up until you've paid a self-insured retention (SIR) deductible for your umbrella policy.
Excess Liability Insurance: What Does it Cover?
You can extend the coverage limits of your existing liability insurance policies by purchasing excess liability insurance. In the event of exhaustion of other liability insurance policies - their policy limits or maximum payout amounts—it takes over. In the event your other policies can't cover the remaining costs, your excess liability insurance will step in to cover what they wouldn't.
Excess liability insurance is often used by small business owners to increase the limits on their primary insurance policy, in the case of claims exceeding their primary policy.
The term coverage is used very literally in excess liability policies, meaning that the policy covers specific occurrences. Professional liability insurance (PLI) or errors and omissions insurance (E&O) are commonly used to boost coverage.
General Liability Insurance
Injury to persons and damage to property, as well as legal and medical expenses, are covered by it. In that case, general liability helps cover the costs involved if someone slips on your stairs, break a bone, and files a lawsuit against you.
Commercial Auto Insurance
Covers injuries or property damage resulting from the use of company vehicles or the use of personal vehicles for business purposes.
Employer’s Liability Insurance
Generally, this liability policy is included in your workers' compensation package and protects you if an employee sues you for a condition not normally covered by workers' comp.
Ensure Your Business is Protected with Excess Insurance Policy
In order to find an insurance company that can provide everything you need in one place, you need to understand your insurance needs.
Companies like yours benefit from the expertise of insurance providers who specialize in contractor insurance.We know what it means to have an excess insurance policy, so if you have questions, contact us at 888-306-7887 at Stampede Insurance Services today!
