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There are two policies that can provide additional liability insurance over your existing liability policies. They are personal umbrella insurance policies and excess liability policies. There is a big conceptual difference in the two policies.
An excess liability policy just extends coverage over your other liability policies. The excess liability policy “mirrors” the coverages of your base policies. As a result, for an excess liability policy to pay a claim the base policy must cover the loss. Also, the base policy must have paid its entire limit for the excess liability policy to begin paying.
The umbrella policy is different. An umbrella policy is generally broader in coverage than your base policies. An umbrella policy could pay if your base policy did not insure a particular occurrence. The umbrella policy still has exclusions and limitations, just fewer than your base policies. As a result, an umbrella policy is considered superior to the excess liability policy. Both of these policies are usually sold in increments of $1 million. The umbrella policy is undersold. Their premiums are reasonable, some under $250 annually, and an umbrella policy can save you from financial ruin. Typically, the primary premium factor is your personal auto policy.