SWG CGL: Excess & Umbrella Explained
The difference between Excess and Umbrella can be a bit confusing. Both are applied in circumstances where the underlying limits of a policy have been reached. Though often used interchangeably, they are not the same. Let’s look at how to differentiate the two:
Excess Liability Insurance provides coverage that exceeds the limits of an underlying liability policy or policies. Suppose that your client opted to take out an excess liability policy. This would kick in if a claim was made for damages exceeding the amount covered by their primary policy. It may be worth noting that excess liability coverage can sit over more than one underlying policy, such as auto or fleet, professional, and general liability coverage. Excess Liability does not require a Self-Insured Retention.
Umbrella Liability Insurance is a type of excess insurance that provides increased limits over underlying insurance. It can also drop down when one of these underlying policies’ aggregate limits are exhausted, and in some cases, it can cover claims that are not included in the underlying policies at all. Umbrella insurance can potentially provide broader coverage than what is already offered by the underlying policy. A minimum of $10,000 Self-Insured Retention is applied for Umbrella Liability.
The most important thing to understand is that both policies will protect a business from significant losses. Whether your client is a store owner, office professional, or wholesaler/manufacturer, Excess and Umbrella Liability provides a way to customize their insurance coverage to protect them against the unique risks and exposures they face.
Increased and Extended Coverage Protects Your Clients From Special Risks
Who benefits from Excess and Umbrella:
● Companies with few assets or businesses just starting out with a limited budget
● Manufacturing companies, who could be held financially responsible for a wide variety of bodily injury and property damage claims and any medical or other expenses incurred by the injured party
● Manufacturers working with potentially hazardous substances that could be released into the environment during operations
Examples of unique risks covered by Excess and Umbrella:
- Litigation arising from property damage and/or personal injury that exceeds the limits of the client’s existing policy.
- For example, a highly-valued executive in the company is injured in a work-related accident, and as a result, not only loses wages but also payment for medical bills and rehabilitative therapy. Excess and Umbrella can also cover associated legal defense costs if the insured is sued for third-party damages.
- A company could also be held responsible for accidents, injury, or death involving its products. For instance, a manufacturer might be forced to recall its products and could face a lawsuit over automotive defects or false advertising. And since they work on such a large scale, auto parts manufacturers need added protection for their machinery and equipment, for stock, and for finished products.
- A construction business may be asked to provide a higher limit for a specific contract for City or Government work, such as road construction, sewer-line installation, and many more.
How Excess & Umbrella Works
For an Umbrella policy to cover claims beyond those covered in the underlying policy, your client needs to pay self-insured retention (SIR). An SIR is the amount of money your client pays before the insurance company responds to the loss. For instance, if your client has an Umbrella policy with a $10,000 SIR, and they make a claim that costs $100,000, then your client will be responsible to pay their portion of $10,000 (SIR) toward the claim, and then the insurance company will pay the remainder.
An Overview of SWG CGL: Excess and Umbrella Liability Insurance
SWG CGL – Commercial General Liability insurance is designed to protect the products or services of small and large businesses. As careful as you might be, there are unforeseen events that can happen to every business. Protect your hard work with a policy that fits your needs.
● Cross liability
● Contingent employer’s liability
● Product Completed Operations coverage (Broad Form)
● Limits up to $10,000,000
● Coverage can be provided for sales into the U.S. and Worldwide
● There is no Deductible applied under Excess Liability
● Umbrella policies are “Follow-Form of CGL” and will pick up on underlying CGL extension coverages unless otherwise excluded
More information is available on our website: https://swgins.com/product/excess-and-umbrella-liability.html
Content is current as of the date of broadcast and is subject to change without notice.