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While the terms “umbrella liability” and “excess liability” are often used interchangeably, they actually represent distinct concepts.
Distinguishing Umbrella and Excess Liability Insurance Excess liability insurance is specific in nature, providing coverage in excess of a particular insurance line, whether it’s general liability, auto liability, or employer’s liability. On the other hand, umbrella liability insurance is comprehensive, extending across all three lines of coverage and even offering protection in cases where the underlying coverage is lacking.
It’s important to note that for either excess liability or umbrella policy to come into play, the underlying insurance policy must first reach its limits.
Both of these insurance policies offer effective solutions to safeguard assets and net worth in the event of a substantial claim. Additionally, they can fulfill the requirements of shippers for specific shipments to be transported.
For instance, excess liability coverage can be tailored to match the specific needs of a shipper, allowing motor carriers to forgo higher limits required by shipping contracts for all their operations. This approach can be cost-effective in many cases but doesn’t provide coverage for other shipments not involving the shipper named in the excess policy.
Given the rising settlements involving trucks, it’s advisable to consider either an umbrella policy or, at the very least, an excess liability policy to protect your company.
One important detail to remember is that if an umbrella policy is triggered for a claim unrelated to the underlying insurance, a retention (or deductible) will apply, typically set at a minimum of $10,000 per claim.