Excess liability and umbrella liability are often referred to in the same context. Both policies provide additional liability limits above the primary insurance policies (these are considered underlying coverage). The common primary policies that an excess or umbrella policy sit over are; commercial auto, general liability and employers’ liability. Additional coverages may be considered for underlying coverage, subject to the carriers’ guidelines. However, the excess coverage and umbrella coverages are very different.
Excess coverage: A policy which extends additional limits of liability over the underlying scheduled policy(ies). This policy is restrictive as it is subject to all the terms, conditions, coverages and exclusions of the underlying policies and provides not additional coverages.
Umbrella Coverage: A policy which extends additional limit of liability over the underlying scheduled policy(ies). This policy is broader than the Excess Liability Coverage as it is subject to its own exclusions and amendments and provides broader coverage than what is covered on the underlying coverage.
Self-Insured Retention: The amount of money the insured must pay before the carrier responds to the loss. The normal self-insured retention on an umbrella policy is $10,000. The self-insured retention does not reduce the limit of liability when a loss occurs.