Many people use "umbrella" insurance and "excess liability" insurance as interchangeable terms. In fact, although they are similar, there are important differences between the two. To help you keep matters straight, the sections below explain the differences between excess liability insurance and an umbrella policy.

What Is Excess Liability Insurance?

Excess liability insurance (ELI) is a type of supplementary coverage that offers additional liability protection once an underlying policy is exhausted. For instance, if you have a business, property, or auto insurance policy and are sued by someone for causing them bodily injuries or property damage, you would normally be liable for any amounts awarded beyond your policy limits. However, ELI comes into play once the limits of the underlying policy are exceeded and pay amounts up to the ELI limits, often $1 million, $2 million, or more.

What Is Umbrella Coverage?

Umbrella coverage is a type of ELI that similarly extends the liability coverage of an underlying policy. However, in addition, it also often broadens coverage in a way that a basic ELI does not. For instance, some umbrella plans broaden your coverage to anywhere in the world, whereas your underlying policy may be limited to the U.S. or even a particular state. Also, some umbrella coverage protects against liability for charges of libel, slander, and false imprisonment, which most basic policies exclude. In other words, while ELI extends your underlying policy, umbrella coverage both broadens and extends it.

To discuss whether an excess liability or umbrella policy is a better fit for your needs, contact Mountcastle Insurance in Winston-Salem, NC—with an additional location in Lexington, NC—for assistance. Their experienced agents offer invaluable assistance and also specialize in auto, home, business, and health insurance. Visit their website to view location details or to drop them a line, or call (336) 777-8500 to discuss your situation with a friendly professional.