February 22, 2012
Q. What is Excess Liability Coverage?
A. Auto, Homeowners, and Watercraft policies all have liability coverage in case you are taken to court due to an accident or other situation. Excess Liability is designed to give you additional coverage above and beyond your liability coverage on your Auto, Homeowners, or Watercraft coverage. Excess Liability also covers you in instances of slander and libel, whereas your Auto, Homeowners, and Watercraft insurance will not. Excess Liability is more commonly known as Umbrella Insurance.
Q. Can I have $10,000/$20,000 insurance and still have an Excess Liability policy?
A. No, most Excess Liability policies require certain underlying limits on your Auto, Homeowners, and Watercraft Insurance policies. In order to be eligible for an Excess Liability policy you typically need: liability limits of $250,000/$500,000/$100,000 split limit or $300,000 Combined Single Limit on your Auto and Watercraft policies and $300,000 liability limit on your homeowners policy. Please note: some companies may offer coverage with higher or lower liability limits based on driving history and the age of all the drivers listed on the policy.
Q. Are there deductibles associated with Excess Liability?
A. The short answer is Yes and No. The best way to explain this is through and example. You are taken to court due to an at-fault auto accident. The amount they are suing you for is $600,000. Your liability limit on your Auto policy is 250/500/100. Your auto policy will take care of the first $250,000, and then your Excess Liability policy will take care of the remaining 350,000 owed. In other words your underlying liability limits on your auto, homeowners, or watercraft policy serves as your deductible. If you Auto, Homeowners, or Watercraft policy does not cover the claim (e.g. in the case of libel), then you have to pay what is known as self-insured retention (SIR). This amount is similar to a deductible you would pay on your Auto, Homeowners, or Watercraft Insurance policy.
Q. Are there any coverages associated with and Excess Liability Policy?
A. Yes. Often Excess Liability Policies offer covereage called Uninsured/Underinsured Motorist. This coverage is designed to serve in excess of your Uninsured/Underinsured Motorist coverage on your Auto Policy. Similar to Excess Liability, you need to have a certain minimum on your Uninsured/Underinsured Motorist Limit. Typically, that minimum is $250,000/$500,000 as a split limit or $300,000 Combined Single Limit.