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Excess liability insurance is a type of coverage that provides additional protection beyond the limits of your primary insurance policies, such as general liability, employer's liability, and hired and non-owned auto liability. For example, if your general liability policy covers up to $1 million and a claim results in a $1.5 million settlement, your excess liability insurance would cover the extra $500,000. This insurance is often an affordable way for businesses to increase their coverage limits and protect themselves against large claims or lawsuits.
Table of content
Legal Use & context
This term is commonly used in the context of business insurance and risk management. Excess liability insurance is relevant in civil law, particularly in cases involving personal injury or negligence claims. Businesses often utilize this coverage to safeguard their assets against significant financial losses that could arise from lawsuits. Users can manage their insurance needs using legal templates available through US Legal Forms, which can help streamline the process of acquiring the necessary coverage.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A small business with a general liability policy limit of $1 million faces a lawsuit that results in a $2 million claim. The business's excess liability insurance would cover the additional $1 million that exceeds the primary policy limit.
Example 2: An individual with an automobile insurance policy covering $300,000 in liability is involved in an accident resulting in $500,000 in damages. Their excess liability insurance would cover the remaining $200,000. (hypothetical example)
State-by-state differences
State
Key Differences
California
Higher minimum coverage limits may be required for certain businesses.
Texas
Excess liability policies may have specific exclusions related to certain industries.
New York
State regulations may influence the availability of certain excess liability policies.
This is not a complete list. State laws vary and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Difference
Umbrella Insurance
Covers broader risks beyond standard liability policies.
Umbrella insurance often includes excess liability but may cover additional types of risks.
General Liability Insurance
Covers basic liability risks for businesses.
General liability insurance has lower limits than excess liability insurance.
Common misunderstandings
What to do if this term applies to you
If you think excess liability insurance may be relevant to your situation, consider the following steps:
Evaluate your current insurance policies to determine if your coverage limits are sufficient.
Consult with an insurance agent to discuss your needs and get quotes for excess liability insurance.
Explore US Legal Forms for templates and resources that can help you understand and manage your insurance options.
If your situation is complex, it may be wise to seek professional legal advice.
Find the legal form that fits your case
Browse our library of 85,000+ state-specific legal templates.
Typical Cost: Generally affordable, varies by coverage limits and risk factors.
Jurisdiction: Available in all states, but terms may vary.
Common Use: Businesses and individuals seeking additional liability protection.
Key takeaways
Frequently asked questions
It covers amounts that exceed the limits of your underlying liability policies, such as general liability and auto liability.
While not mandatory, it is highly recommended for small businesses to protect against significant financial risks.
The amount you need depends on your business size, assets, and potential risks. Consulting with an insurance professional can help determine the right coverage.