Commercial umbrella insurance provides an extra layer of liability protection by covering costs that go beyond your other liability coverage limits. In other words, commercial umbrella insurance complements your other liability coverages by taking over when your other liability coverage limits have been reached.
Excess Liability insurance is a type of policy that provides limits that exceed the underlying liability policy. It is no broader concerning the incidents covered by the primary insurance, meaning it will not expand the stated coverage but will provide higher limits on top of the original policy.
The primary purpose of Commercial Umbrella/Excess Liability insurance is to close coverage gaps and to offer an added layer of protection in case the underlying insurance is exhausted of all possible resources.
For example, if your company is found liable for a customer’s injury at your place of business and you are sued for $1.5 million but only have $1 million in liability coverage, a commercial umbrella policy could make up for the $500,000 shortfall, subject to the policy’s coverage limits.