As customers become savvier about insurance, they often realize that complete coverage includes an umbrella policy. Many people, however, make the mistake of selecting an excess liability policy instead, thinking the two terms are interchangeable, when, in fact, there are differences when it comes to umbrella versus excess liability coverage.
Most insurers will say umbrella coverage is a form of excess liability coverage. When purchased, both are attached to underlying coverage, or a customer’s existing policy, providing more protection from catastrophic events. Here are the main differences:
Both excess and umbrella policies provide added coverage to an existing product, boosting the original policy’s limits. Excess liability does not provide broader protection, though, which is one of the key features of an umbrella policy.
Umbrella coverage is a form of excess liability insurance and typically extends the benefits of the policy it is attached to. Umbrella insurance attached to a homeowners policy protects the insured from certain incidents that occur outside the home. For example, if a birthday treat sent to school makes a handful of kids sick and those parents sue, umbrella coverage would financially protect the policyholder.
When it comes to umbrella vs excess liability coverage, remember that umbrella policies cover more, just like an umbrella protects from the weather. Excess coverage helps, but may not cover as much as umbrella will.