The Good Steward

Policy Spotlight: Umbrella vs. Excess

April 2021 

Umbrella and Excess policies confuse many people because the coverages are similar—but they’re not interchangeable. It’s important that you note the difference, so that you can have the right amount of coverage for your religious institution, Steve Follos, Senior Vice President and General Manager of Church Insurance Agency Corporation, says.

Steve offers an easy way to remember how they vary:

  • Umbrella insurance acts like its namesake by broadening the scope of coverage to claims not included in an underlying policy. Umbrella insurance also supplements primary coverage by paying once the liability limits of the basic policy have been exhausted. 
  • Excess insurance sits on top of primary coverage and provides higher limits without changing the nature or scope of protection.

“Umbrella policies are like safety nets. They go beyond the limits of the underlying coverages in certain situations. An umbrella can drop down and fill in some gaps in coverage as well as provide additional limits when the underlying policy has been exhausted,” Steve says.

When an umbrella policy drops down, the insured usually has to fulfill a self-insured retention (which is similar to a deductible and is typically about $10,000).

“We refer to excess insurance, on the other hand, as ‘following form,’” Steve explains. Excess insurance on a general liability policy, for example, “follows the form” of the primary policy but gives you a higher limit, providing coverage for extreme types of bodily injury or property damage.

How Much Is Enough?

“If you extend your ministry beyond your premises and basic church services, you are at greater risk,” Steve warns. He gives the example of a school where many children are present for long periods of time. “Accidents are more common in that situation than for a church that is simply holding Sunday services. Choosing a higher limit of coverage is prudent,” he says.

Church Insurance’s policy is a single policy, so you already have umbrella and excess insurance in place if you are a customer. If you would like to discuss your limits, contact your representative.