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 Connecticut, excess insurance is designed to offer additional protection beyond the limits of the insured's primary policy or self-insurance. It becomes effective only after the underlying policy's limits have been exhausted. Excess liability insurance specifically extends the coverage of a primary liability policy, such as general liability or commercial general liability, with the same terms and conditions, but with additional limits. On the other hand, umbrella insurance not only provides extra limits over the underlying liability policies but also potentially broadens coverage to include risks that the primary policies may not cover, subject to its own terms and conditions. Both types of policies are considered to 'sit on top of' the primary coverage, providing a safety net for claims that exceed the primary policy's capacity. It's important for policyholders to understand the distinctions between excess liability and umbrella insurance to ensure they have the appropriate level of coverage for their needs. Connecticut's insurance regulations ensure that these products comply with state standards and that insurers operate within the legal framework established by the state's insurance department.