The Differences Between Excess Liability and Umbrella Insurance

Commercial excess liability insurance and umbrella insurance are secondary coverage policies that attach after primary insurance policy limits—such as general liability, employer’s liability and commercial auto insurance—have been exhausted. This additional coverage can protect your business from the financial consequences of large losses that exceed what your primary insurance can cover. While excess liability and umbrella insurance are often thought of as interchangeable, they are not the same. This article discusses what excess liability and umbrella insurance policies are, and the key differences between them.

What Is Excess Liability Insurance?

An excess liability insurance policy provides coverage limits in excess of an underlying liability policy. Put another way, excess liability policies “drop down” to replace primary coverage when limits on the primary policy have been exhausted. This type of coverage often matches the exact terms of the primary policy or policies. However, an excess liability insurance policy can also be more restrictive and include more exclusions than primary policies. It should be noted that excess liability insurance only offers additional limits to the primary insurance policy and will not protect a business if there is no primary policy already in place.

What Is Umbrella Insurance?

Umbrella insurance, like excess liability insurance, provides coverage for claims that exceed the limits found in a primary policy. However, this type of policy can offer broader coverage for losses outside of those outlined within the primary policy or policies.

Key Differences

While umbrella and excess liability insurance are both types of secondary insurance that function nearly the same, there are a few notable differences. The biggest difference between the two is that umbrella insurance can broaden coverage and apply to losses not covered by the primary coverages that are in place, while excess insurance only extends the limits of liability of the primary policy or policies.


California businesses can benefit from both umbrella and excess liability insurance policies, as these coverages add critical layers of protection to primary insurance policies. These policies can protect California business owners from catastrophic losses that exceed the coverage limits of their liability policy and reduce the chance that a lawsuit or other claim could bankrupt their business. In a state where costs for insurance settlements and jury verdicts frequently reach millions of dollars, California business owners should consider umbrella and excess liability policies as a critical component of their insurance and risk management program. For more information about these policies and how they can benefit your California business, contact us today.

The information included in this website was collected from sources that are considered reliable including, without limitation, rate information provided by carriers, coverage descriptions from carriers and marketing materials from various sources. This information is provided for educational purposes only. We have not verified nor can we guarantee the accuracy, timeliness or completeness of such information. This website is provided on an "AS-IS" basis. Thus, it is solely your responsibility to verify any information you obtain from this Website before making decisions or incurring costs based on such information. This information is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice or policy coverage. Readers should contact legal counsel or an insurance professional for appropriate advice. Please refer to your policy or talk with your broker for specific coverages and exclusions that are applicable to your situation.