Excess Liability Coverage Over Employer’s Liability: Safeguards Your Business When Standard Limits Aren't Enough
Serious workplace injuries or lawsuits can exceed your employer’s liability policy limits. Excess liability coverage steps in to fill that gap, protecting your business from devastating out-of-pocket costs and supporting your team when the unexpected happens.
When Excess Liability Coverage Makes the Difference
Real scenarios that show exactly when and how excess liability protection saves your business.
Slip-and-Fall Beyond Policy Limits
Alice’s small manufacturing firm experienced a workplace accident when an employee slipped and suffered serious injuries. Standard employer’s liability coverage handled most claims, but the total costs—including medical and legal—exceeded the limit by $60,000. Excess liability coverage immediately filled the gap, ensuring no disruption to Alice’s operations or finances. Instead of facing heavy out-of-pocket expenses, Alice’s firm only managed their deductible and the employee received the care they needed.
Catastrophic Injury Lawsuit
After a warehouse mishap led to a severe injury, Jacob’s company was sued for damages well above their employer’s liability policy—nearly $350,000 more. The excess liability policy delivered expert claims service and covered the excess cost, keeping the company’s assets—and jobs—secure. Instead of a protracted crisis, Jacob’s business continued operating smoothly while the claim was professionally managed.
Multiple Employee Claims in One Year
Maria’s construction company faced two serious injury claims in a single year, exhausting the annual aggregate of her main employer’s liability policy. With potential liabilities totaling over $1 million, excess liability coverage fully stepped in. This safeguarded her business, protected employee jobs, and provided peace of mind during an otherwise catastrophic scenario.
Everything You Need to Know About Excess Liability Coverage Over Employer’s Liability
The complete picture: what's covered, what's not, and how to decide if you need it.
Excess Liability Coverage Over Employer’s Liability (Plain English)
Excess liability coverage over employer’s liability is added protection for your business when a workplace injury or lawsuit costs more than your main employer’s liability policy covers. When medical expenses, legal fees, or large settlements go beyond your primary policy’s limit, this coverage pays the extra amount—so your business assets and payroll stay protected. The key thing to understand is that it protects your business from unexpected, high-dollar risks.
The Details That Matter
No deductible usually applies (that’s handled by your main policy). Coverage limits are set by your chosen umbrella amount—often from $1 million to $10 million. Payouts only begin after your standard employer’s liability limit is used up, and the claim must be eligible under the main policy. Check your policy for exact exclusions and aggregate limits.
Excess Liability vs. Employer’s Liability
Excess liability coverage is NOT the same as employer’s liability. Employer’s liability covers workplace injury claims up to your base limit, while excess liability provides extra coverage when costs exceed those limits. You typically need both to stay fully protected.
Who Needs Excess Liability Coverage Over Employer’s Liability?
You typically need this coverage if:
- You are a business owner with employees in jobs with any injury risk
- Your work includes potential for larger settlements or legal claims
You might skip this coverage if:
- Your company has no employees or only hires independent contractors
Coverage Amounts and Limits
Limits are chosen based on your business size and risk—commonly $1 million, $2 million, or higher aggregate limits. There’s usually no deductible for the umbrella itself; limits stack on top of your main policy. Custom options may be offered for higher-risk industries.
What's NOT Covered by Excess Liability Coverage
This coverage does NOT cover:
- Claims excluded under your main employer’s liability policy: If your primary coverage doesn’t apply, the umbrella doesn’t either.
- Other liability types (auto, professional errors, etc.): You’d need specific umbrella or separate coverage for these exposures.
For these situations, you'd need additional or dedicated insurance.
Ready to Add Excess Liability Protection?
Now that you understand excess liability coverage, see how affordable protection can be with personalized quotes from 26+ carriers.
Experience You Can Trust
1,430+ businesses trust our expertise to explain coverage clearly and find the right protection for their needs.
4.9/5 Stars
Google Reviews from real customers, just like you
97% Retention
Customers stay with us year over year over year
Independent
We work for you, not insurance companies
Local
Fort Collins owned & operated since 1992
How Excess Liability Coverage Actually Works
Understanding exactly what happens when you file an excess liability claim—step by step, from start to finish.
The Claims Process
- Start with Your Primary Employer’s Liability Claim: Report the incident to your insurer, who processes the claim under standard policy terms.
- Reach Your Policy Limit: If claim costs rise above your employer’s liability policy limit, your insurer will notify you and trigger the excess policy.
- Excess Liability Kicks In: The excess (umbrella) carrier reviews the situation, confirms coverage, and starts handling the costs that exceed your main policy’s limit.
- Settlement and Support: Once final amounts are determined, the excess coverage pays the additional costs—so you are not left with a massive out-of-pocket bill.
What You Pay
Your main employer’s liability policy deductible applies first—usually $500 to $2,000 per claim. There is no separate deductible for excess liability. Your premium covers substantially increased protection without gaps. Select a coverage limit that matches your business risk and comfort level.
Timeline
Simple claims (that don’t reach umbrella limits) resolve in a few days to weeks. Excess liability claims may take longer, especially if legal or medical complexity is involved—expect several weeks to months. Most clients find the process smooth with expert guidance. The key is clear communication—so your insurer can quickly step in as costs climb.
The Real Cost of Going Without Excess Liability Protection
Understanding the real financial impact: what you pay for coverage vs. what you risk without it.
Minor Injury Claim Above Policy Limit
Annual Coverage Cost: $700
Scenario: An employee’s injury claim reaches $120,000, with your main policy limit at $100,000.
Without Coverage: $20,000 out-of-pocket
With Coverage: $0 (after your main deductible + premium)
Protection Value: $20,000 saved from one incident
Serious Lawsuit Exceeding Base Insurance
Annual Coverage Cost: $1,300
Scenario: Catastrophic workplace injury results in a $425,000 judgment; your policy limit is $250,000.
Without Coverage: $175,000 out-of-pocket
With Coverage: $0 (after main policy + premium)
Protection Value: $175,000 saved in one serious claim
Multiple Claims in a Bad Year
Annual Coverage Cost: $2,500
Scenario: Two claims together total $1,200,000, above your $1,000,000 main policy aggregate.
Without Coverage: $200,000 out-of-pocket
With Coverage: $0 (beyond main deductible and premium)
Protection Value: $200,000+ safeguarded during a challenging year
The Economic Reality
For most businesses, excess liability insurance costs $60–$200 per month—less than a single team lunch. One uncovered incident could cost $20,000 to $500,000+, taking years to recover from. The math is simple: excess liability coverage pays for itself the first time you need it—and helps protect your financial future.
4 Costly Excess Liability Mistakes to Avoid
Learn from others' mistakes—avoid these common errors that can leave your business exposed when you need coverage most.
Assuming Your Basic Policy Covers All Risks
Many business owners believe their base employer’s liability policy is enough. But large claims can easily exceed these limits. Instead, regularly review your risk and limits, especially if your workforce or operations grow.
Choosing Too Low of an Excess Limit
It’s tempting to save on premiums by selecting a low umbrella limit. If your coverage runs out, you are liable for everything above it. Select a limit that reflects your company’s potential exposure, not just your budget.
Not Addressing Exclusions
Assuming all claims are covered can be costly. Excess coverage only applies to claims already covered under your employer’s liability policy. Review exclusions and get advice about gaps that may need a separate umbrella or specialty coverage.
Waiting Until After a Loss to Consider Buying
Some business owners only consider excess liability after a near-miss or big claim. Coverage must be in place before a loss occurs. Proactively assess your risk—and secure protection early to safeguard your future.
Find answers to your most pressing insurance questions right here.
Explore Your Coverage Options
Discover the best insurance coverage tailored to your individual needs and protect what matters most.