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 Idaho, excess insurance is designed to provide additional coverage beyond the limits of the insured's primary policy. This type of insurance activates when a claim exceeds the underlying policy's maximum coverage amount. 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 offers additional limits over one or more underlying liability policies but can also provide broader coverage, potentially filling in gaps not covered by the primary policies. Both excess liability and umbrella insurance are considered secondary coverage, meaning they only come into play after the primary insurance has been exhausted. Idaho's regulations on excess and umbrella insurance follow the standard insurance practices, and these policies are regulated by the Idaho Department of Insurance, which ensures that insurance carriers comply with state statutes and regulations.