Choosing Between Liability and Umbrella Insurance

Purchasing liability insurance is a critical decision for any business owner. However, choosing the right coverages can be a daunting task. It’s important to understand the differences when choosing between excess vs. umbrella insurance plans. The terms are commonly mistaken for each other, but each has key distinctions.

Excess Liability Insurance

The secret to understanding excess liability insurance lies in its name. It provides higher coverage limits for existing insurance plans.

If, for example, a business owner purchases liability coverage of up to $1 million but believes they need more protection, they can purchase an excess liability plan to layer on top. No new coverages are provided, but existing ones have been strengthened, giving the business owner peace of mind.  

Umbrella Insurance

The name is key to understanding umbrella insurance as well. Like an actual umbrella, it spreads protection over a larger area.

For instance, if the business owner faces medical costs for a vehicle accident that are not covered in their current plan, the umbrella insurance will kick in, covering those costs. Like carrying an umbrella in case of an unexpected storm, umbrella insurance protects against life’s surprises.

Choosing between excess vs. umbrella insurance is easy for a business owner once they understand what each insurance is intended for.

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