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 North Carolina, 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 maximum coverage amount. 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. On the other hand, umbrella insurance extends coverage over multiple underlying liability policies, such as auto, general liability, or employers' liability insurance, and comes into play when the limits of these policies are reached. Both types of insurance serve as a safety net for policyholders, offering protection against significant financial loss that could arise from claims that surpass the coverage limits of their primary insurance policies. It's important for individuals and businesses in North Carolina to understand the terms and coverage of their excess and umbrella insurance policies to ensure adequate protection against potential risks.