Umbrella vs Excess | Umbrella Insurance Policy vs Excess Insurance Policy
If you ask any gentleman difference between these two terms he may laugh at you seeing the words. But this is because the word liability has not been suffixed to them. Umbrella liability and excess liability are actually terms of insurance policies that provide additional protection in case a person really needs it. Businesses today lose big sums of money through claims made by people and their basic insurance policies do not cover such astronomical sums. A few decades ago, claims and verdicts of millions of dollars were unheard of but today one can hear and read about such cases commonly. When a truck driver hits another vehicle and the victim suffers a brain injury, it is not uncommon to hear of verdicts going in millions of dollars in favor of the victim. This is where provisions like umbrella and excess liability come to the rescue of policy holders.
When a policy holder is being sued in a civil court, whether for bad driving or any other reason, he badly needs liability coverage. Now liability protection naturally comes from car insurance policy but rest of protection comes through special policies like umbrella and excess insurance. Umbrella insurance is a policy that protects the assets and future income of a person who holds the policy when he is being sued for some damages in a civil court. This protection is over and above the protection a policy holder gets from his standard insurance policies. There is another insurance policy known as excess insurance policy that comes to the rescue of a person in a similar way. Umbrella policy becomes the primary policy in situations that are full of distress and the person does not know where the claim is going to come from. Its very name (umbrella) indicates its ability to work as a shield for an individual that saves his assets in a better manner that his primary policies.
A person may hold a home insurance policy and also an auto insurance policy with varying liability limits. But when he buys an umbrella insurance policy with a million dollar umbrella, his liability limits of each policy get increased automatically by a million dollars. However, umbrella insurance provides coverage in many more circumstances and is not limited to the policies you have already taken. You may get liability protection against slander, false arrest, libel, and so on.
Difference Between Umbrella and Excess Insurance Policies
• Excess liability insurance policy is similar in nature to umbrella insurance policy but comes into effect only when all underlying policies have been exhausted to cover the claim a person has been asked to pay, and provides extra coverage when primary policies are not able to cough up the liability.
• Umbrella insurance policy automatically increases the liability protection of any policy that may be held by the individual by a million dollars or its multiples and may provide coverage in even those areas where a person has not taken any insurance.