What Is The Difference Between Umbrella Insurance And Excess Insurance?

The total value of your financial life is your assets. The various categories of assets include personal, such as artwork, cars, checking accounts, jewelry, collectibles, electronics, retirement, and savings accounts. Your assets can also be tangible and intangible such as land and copyrights. Asset protection is a separate area of law, and its purpose is to protect your assets from a civil legal judgment as a result of a lawsuit or from attachment by creditors in any other proceeding. One way of protecting your assets is purchasing an Umbrella or Excess insurance policy. These types of policies require that you have an underlying policy such as a homeowners insurance, automobile, or commercial property insurance. Asset protection insurance is a type of liability insurance.

A typical example of why umbrella insurance is critical is if you are in a car accident and that the passenger(s) of the other car suffer from severe bodily injuries and property damages. Umbrella insurance with a one million dollar limit above the limit of your auto insurance could protect you from financial destruction which exceeds the limits of your auto insurance policy by thousands of dollars. You must pay for these damages that are over the limits of your policy. Umbrella insurance automatically takes over when your auto policy limits are exceeded.

Umbrella insurance pays the excess amount that exceeds the primary policy, but Umbrella insurance is not defined as Excess insurance.

Umbrella insurance, unlike Excess insurance: 

  1. broadens or extends the coverage of the underlying policy
  2. fills in the holes of coverage that the underlying insurance does not cover
  3. sometimes lack exclusions used in underlying primary policies 

Excess insurance cannot provide broader protection than the underlying coverage and could be more prohibitive than the underlying policy. Some carriers blur the lines between Excess and Umbrella insurance.

The M8 Insurance agents in Salt Lake City, UT will provide you with appropriate insurance that will meet your needs. Please call!