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 New York, excess insurance is designed to provide additional coverage beyond the limits of the insured's primary policy. It activates when a claim exceeds the underlying policy's coverage limits. Excess liability insurance specifically adds further coverage to a primary liability policy, such as general liability or commercial general liability, with the same terms as the primary policy. Umbrella insurance, while similar, is broader; it extends coverage over multiple underlying liability policies, such as auto, general liability, and employers' liability. Once the limits of these policies are reached, the umbrella policy provides additional coverage. Both types of insurance serve as a safety net for policyholders, offering financial protection against claims that surpass the primary insurance coverage. New York's insurance regulations, overseen by the New York State Department of Financial Services, ensure that these products meet state standards and provide the intended additional coverage to policyholders.