Umbrella and Excess Coverage
Umbrella insurance provides additional liability insurance limits over your scheduled contractor insurance policies. This can protect you against large claims that may exceed your underlying general liability, employer's liability or auto policy limits. Umbrella insurance can also provide protection for "gaps" in coverage. For example, if the underlying policy has an exclusion, but the umbrella does not, the umbrella may drop down and pick up a loss on a primary basis.
Excess Liability is similar in intent to umbrella coverage in that it also serves to increase your limits of liability with the distinction that it is often referred to as "following form." This means the excess policy will also help increase the limits of primary policies in the event of a loss, but the policy form will follow the exact policy language of the underlying policies. An excess policy will not pick up "gaps" in coverage like an umbrella.
Umbrella Insurance Provides Extra Protection for Contractors
With umbrella and excess liability insurance, you gain important protection that helps insulate you from a large claims that could cost you hundreds of thousands, or even millions of dollars.
With one simple policy you can increase the limits of your contractor insurance policies in $1,000,000 increments until you are sufficiently covered against even the largest of claims. Umbrella and Excess insurance are useful in increasing the limits on policies most subject to risk. This includes:
- Commercial auto coverage for injuries and damage sustained as a result of an auto accident.
- General liability coverage for third-party bodily injury or property damage claims.
- Employer's Liability coverage in the event a third party sues you for negligence because their loved one is injured as a result of a workers' compensation claim. While workers' compensation covers injuries to employees, the employer's liability coverage protects employers' from claims of negligence alleged by family members of the injured worker.
How Umbrella and Excess Coverage Works
When would you need Umbrella or Excess coverage, and how does it work to protect you against large claims? Let’s say you are in an auto accident on your way to a project site. You have a commercial auto policy with a combined single limit of $1,000,000 in liability coverage. The accident results in property damage to multiple vehicles, as well as bodily injury to multiple drivers. Unfortunately, you are found to be at fault, and a claim is made against your commercial auto policy. With multiple people needing medical attention, vehicle repair, and more, the claim exceeds your commercial auto policy limit of $1,000,000 by $250,000.
If you don’t have Umbrella or excess insurance under this scenario, you are responsible for your policy deductible amount plus the remaining $250,000 for the incident. That means you will be liable for the remaining $250,000 in damages. If you have umbrella coverage, your assets are protected. Umbrella and Excess coverage kick in as soon as you have maxed out the limits of your underlying policy. With umbrella and excess insurance, you are only responsible for paying your policy deductibles as long as the claim remains under your umbrella or excess limit of insurance.
Beach & O’Neill Insurance Associates has first hand experience with large claims in the construction industry. Based on your specialized field and the coverage you have, we can help you discuss the right amount of umbrella or excess insurance you should consider to fully safeguard you from large claims. Umbrella insurance is available in increments of $1,000,000 and the price per million decreases as you purchase higher limits. We can assist you with selecting just the right coverage you need at the premium you can afford.