Excess Liability Insurance
Coverage that pays claims exceeding the limits of an underlying primary liability policy.
What is Excess Liability?
Excess liability insurance provides an additional layer of financial protection that activates once the limits of a specified underlying primary policy — such as commercial general liability or auto liability — have been exhausted. Unlike umbrella insurance, which can sit over multiple underlying policies and often broadens coverage, excess liability follows the exact form of the underlying policy and provides no broader coverage terms. Excess liability is commonly purchased by large businesses that face high claim severity, or by contractors and professionals required by contract to carry elevated liability limits.
Example
A construction company carries a $2 million commercial general liability policy. After a serious job-site accident results in a $3.5 million jury verdict, the primary CGL policy pays its $2 million limit and the $5 million excess liability policy covers the remaining $1.5 million — preventing the contractor from having to satisfy the judgment out of business assets.
Source: National Association of Insurance Commissioners — Commercial Lines