Excess insurance is insurance that covers the insured against certain risks and applies only to loss or damage in excess of a stated amount, or of a specified primary insurance policy or amount of self-insurance.
Although the terms excess liability insurance and umbrella insurance are sometimes used interchangeably, there is an important distinction. Excess liability insurance provides additional coverage for one of your primary liability insurance policies (general liability insurance, commercial general liability insurance) and kicks in with an additional amount of coverage under the same terms as the underlying, primary policy. Umbrella insurance provides additional coverage for several underlying liability policies and kicks in when proceeds from one of those policies reaches its limit.
In insurance industry jargon, both excess liability insurance policies and umbrella insurance policies are said to “sit on top of” the underlying liability insurance policy or policies.
In Texas, excess insurance is a type of coverage that provides additional protection beyond the limits of the insured's primary policy. It is designed to cover claims that exceed the amount of the primary insurance coverage, acting as a safety net for policyholders. Excess liability insurance specifically adds extra coverage to a single underlying liability policy, such as general liability or commercial general liability, and follows the terms of that primary policy. Umbrella insurance, on the other hand, extends coverage over multiple underlying liability policies, such as auto, general liability, and employers' liability insurance. It not only provides additional limits but may also broaden coverage to include risks not covered by the underlying policies. Both types of insurance 'sit on top of' the primary policy and are crucial for individuals and businesses seeking to protect their assets from significant claims that could exceed their primary insurance limits. Texas policyholders should consult with an attorney or insurance agent to understand the specific terms, conditions, and exclusions of their excess and umbrella insurance policies.
