Understanding the Difference Between a Commercial Excess Policy and a Commercial Umbrella Policy in Washington State

When it comes to protecting a business from significant financial losses due to liability claims, insurance plays a crucial role. Two common types of liability coverage that provide additional protection beyond primary insurance policies are commercial excess liability policies and commercial umbrella policies. While these terms are often used interchangeably, they serve different purposes and have key distinctions. 

What is a Commercial Excess Liability Policy? 

A commercial excess liability policy is designed to provide additional coverage beyond the limits of a business’s primary liability insurance. However, it follows the terms, conditions, and exclusions of the underlying policy without expanding coverage. Essentially, it is a straightforward extension of an existing policy’s limits. 

Key Features of Excess Liability Policies: 

• Increases the coverage limits of the underlying liability policies (e.g., general liability, auto liability, or employer’s liability). 
• Can apply to multiple underlying policies, not just one, depending on the structure of the coverage. 
• Does not add new types of coverage beyond what the primary policies include. 
• Follows the exact terms, conditions, and exclusions of the underlying policies. 
• Kicks in only when the limits of the underlying policies are exhausted. 

What is a Commercial Umbrella Policy? 

A commercial umbrella policy also provides additional liability coverage, but it offers broader protection than an excess policy. In addition to increasing the limits of underlying policies, an umbrella policy may provide coverage for situations not included in the primary insurance policies. 

Key Features of Umbrella Policies: 

• Extends the limits of multiple underlying liability policies. 
• Can provide coverage for claims not covered by underlying policies, subject to a self-insured retention (similar to a deductible). 
• May apply when an underlying policy excludes specific claims that the umbrella policy covers. 
• Offers additional peace of mind by covering more diverse risks. 

Key Differences Between Excess And Umbrella Policies

Which Policy is Right for Your Business in Washington State? 

The choice between a commercial excess liability policy and a commercial umbrella policy depends on a business’s specific risk exposure and coverage needs

• If your business wants to strictly extend the limits of existing coverage without adding new types of protection, an excess liability policy might be sufficient. 
• If your business needs additional protection beyond what primary policies cover, a commercial umbrella policy provides broader security. 

Commercial Excess and Umbrella Insurance in Lynnwood, WA 

If you own a business in Lynnwood, WA, or anywhere in Washington State, ensuring you have the right liability protection is crucial. Hood Insurance Agency specializes in business insurance solutions tailored to the unique risks faced by Washington businesses. Whether you need a commercial excess policy or an umbrella policy, our team is here to help you navigate your options and secure the right coverage. 

Speak With An Agent Today At Hood Insurance Agency In Lynnwood, WA? 

Both commercial excess and commercial umbrella policies serve to protect businesses from large liability claims, but they function differently. An excess liability policy is a simple limit booster for underlying policies, while an umbrella policy offers both higher limits and expanded coverage. Business owners should work with their insurance agent to evaluate their risks and determine the best approach to securing comprehensive liability protection. If you’re unsure which policy fits your business needs, Hood Insurance Agency in Lynnwood, WA, can help. Contact us today for expert guidance on securing the right coverage for your Washington business.