What is a prerequisite for Commercial Excess/Umbrella Liability Coverage?

Commercial Excess/Umbrella Liability Coverage is designed to provide an additional layer of protection over primary liability policies. This type of coverage extends beyond the limits of the primary insurance policies and serves to fill gaps in coverage.

To qualify for excess or umbrella coverage, a business must first carry primary liability coverage that meets minimum required limits set by the insurer. This requirement ensures that there is an existing primary layer of coverage that the excess or umbrella policy can build upon. The excess policy acts as a supplemental source of liability protection, kicking in when the limits of the primary policy are exhausted.

In summary, the prerequisite of having primary liability coverage with minimum required limits ensures that the umbrella or excess coverage is appropriately positioned to provide the necessary additional financial support, thereby reinforcing the overall liability protection for the business.