Do You Need Excess Liability Coverage?

Excess liability insurance provides insurance limits above and beyond a business’s standard liability insurance policies. When a claim is reported to the excess liability provider, the first policy to respond is the underlying primary, whether it’s an auto liability, employer’s liability, or general liability policy. If the claim exhausts the limits in the primary liability policy, the excess liability coverage makes up the difference where the primary left off.

The excess liability policy marketplace is becoming tighter and tighter. Buyers of excess liability and umbrella coverage faced a mix of soaring rates and a capacity crunch at July 1 renewals due to the coronavirus outbreak’s effects. Some policyholders paid more for coverage, and some bought less excess liability coverage, while others were unable to achieve their past or desired levels of protection.

To better understand excess liability insurance and why your business may need it, here’s a closer look.

Who Needs Excess Liability Coverage?

Compared to some other types of commercial insurance, such as general liability insurance, not every small to medium business will need excess liability coverage. That’s why it’s important to consider what your business does, how you operate, what your budget looks like, and your risks to determine whether or not you need this kind of insurance policy.

Excess liability coverage is helpful for businesses with higher risk, such as construction or building companies, that are more likely to face expensive claims that could extend passed their primary insurance coverages. Similarly, if you run a business in a busy area, you may determine that your risk level warrants investing in excess liability insurance.

On the other hand, if you run a business online, such as an eCommerce site managed from your home, you may find that any current insurance policy you have is sufficient.

How Much Does Excess Liability Cost?

The cost of purchasing excess liability is notable compared to the amount of protection it includes. The cost of $1 million of personal protection usually comes in around $150 with the second million costing around $75. The cost to purchase excess liability insurance for a small business may be twice as costly as buying a personal policy; this depends on the type of business and exposure.

Umbrella Liability Insurance

Umbrella liability policies provide coverage for limits that exceed the underlying liability coverages. The general underlying policies include employer’s liability, automobile liability, and general liability. What makes an umbrella liability policy different from excess liability is that it can provide coverage for claims not covered by the primary policies. These claims are subject to a type of deductible known as self-insured retention.

Considering the Limits and Coverage

An excess liability policy strictly provides additional limits above the primary policy, but it doesn’t provide extra coverage. If the primary policy provides coverage for a specific claim, so does the excess liability insurance policy. If it is not covered under the primary policy, it is not protected under the excess liability insurance policy.

About Byrnes Agency

At Byrnes Agency, we offer insurance solutions that can be tailored to meet your specific needs. Whether you’re looking for personal policies or commercial coverage, we have the right coverage for you. To learn more about our products, contact us today at one of our two locations.

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Dayville Office
Phone: (860) 774-8549
394 Lake Rd
Dayville, CT 06241
United States
Hours of Operation: Monday- Friday 9:00am-5:00pm

Norwich Office
Phone: (860) 886-5498
6 Consumers Avenue
Norwich, CT 06360
United States
Hours of Operation: Monday- Friday 9:00am-5:00pm

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