Excess insurance is insurance that covers the insured against certain risks and applies only to loss or damage in excess of a stated amount, or of a specified primary insurance policy or amount of self-insurance.

Although the terms excess liability insurance and umbrella insurance are sometimes used interchangeably, there is an important distinction. Excess liability insurance provides additional coverage for one of your primary liability insurance policies (general liability insurance, commercial general liability insurance) and kicks in with an additional amount of coverage under the same terms as the underlying, primary policy. Umbrella insurance provides additional coverage for several underlying liability policies and kicks in when proceeds from one of those policies reaches its limit.

In insurance industry jargon, both excess liability insurance policies and umbrella insurance policies are said to “sit on top of” the underlying liability insurance policy or policies.

In Colorado, excess insurance is a type of coverage that provides additional protection beyond the limits of the insured's primary policy. It activates only when the underlying policy's limits have been exhausted. Excess liability insurance specifically adds extra coverage to a primary liability policy, such as general liability or commercial general liability, with the same terms as the underlying policy. On the other hand, umbrella insurance extends coverage over multiple underlying liability policies, such as auto, general liability, or employers' liability, and it may also cover certain risks that are not covered by the primary policies. Both types of insurance are designed to offer an additional layer of security in the event of significant claims that exceed the limits of one's primary insurance coverage. It's important for policyholders to understand the terms and coverage limits of their excess and umbrella insurance policies to ensure adequate protection for their assets and operations in Colorado.