Your insurance agent has just given two quotes to review. One is for a Commercial Umbrella and one is for an Excess Liability policy. What is the difference?
A Commercial Umbrella policy and a Commercial Excess policy both provide additional liability limits above underlying policies, but they work differently. The main differences are scope of coverage and flexibility.
1. Commercial Excess Policy
A Commercial Excess policy simply adds extra limits over a specific underlying policy and follows the same terms and conditions.
Key characteristics:
- Provides additional limits only
- Follows the underlying policy wording
- Covers only what the underlying policy covers
- Does not broaden coverage
Example:
- Your Commercial Auto Liability policy limit = $1,000,000
- You purchase a $4,000,000 Excess policy
If a claim is $3,000,000:
- Auto policy pays $1,000,000
- Excess policy pays $2,000,000
If the underlying policy doesn’t cover the claim, the excess policy won’t either.
2. Commercial Umbrella Policy
A Commercial Umbrella policy also adds extra limits, but it can also broaden coverage beyond the underlying policies.
Key characteristics:
- Provides additional limits
- May cover multiple underlying policies (GL, Auto, Employers Liability)
- Can drop down to cover certain claims not covered by the underlying policy
- Has its own coverage language
Example: A claim might not be covered under your General Liability policy due to a restriction, but the Umbrella might cover it (sometimes subject to a self-insured retention, like a deductible).
Simple Comparison
| Feature | Commercial Excess | Commercial Umbrella |
|---|---|---|
| Adds extra limits | Yes | Yes |
| Broadens coverage | No | Sometimes |
| Follows underlying policy | Yes | Not always |
| Can cover multiple policies | Usually no | Yes |
| Drop-down coverage | No | Sometimes |
✅ Simple way to remember:
- Excess = more limit only
- Umbrella = more limit + sometimes broader coverage
For more information please contact your Professional Underwriters Inc. agent or you can contact us here.