Excess Liability

Excess liability coverage sits above your primary insurance policies and pays only after those underlying limits are exhausted. It does not change what is covered -- it extends the dollar amount available for losses that exceed what the underlying policy can pay. A personal umbrella is the most common form of excess liability for individuals and families. Commercial excess policies serve the same function for businesses of all sizes.

Think of it as a second financial layer. A personal auto policy with $250,000 bodily injury per person has a hard ceiling at $250,000 per injured individual. A $1,000,000 umbrella behind it means that if a crash produces a $700,000 judgment against you, the auto policy pays its $250,000 and the umbrella pays the remaining $450,000. Without the umbrella, you pay $450,000 personally -- from savings, home equity, and future wages, which can be garnished.

Personal umbrella policies typically start at $1,000,000 in coverage and cost $150 to $350 per year depending on the number of vehicles and properties you own and your claims history. For most households, the cost-to-protection ratio is among the best of any insurance product available. Carriers generally require the underlying auto and homeowners policies to meet minimum liability thresholds before they will issue an umbrella. Keeping all layers of your liability program coordinated and current is important: a gap in underlying limits can cause the umbrella to respond differently than expected at claim time.