# Umbrella vs excess liability insurance

> Understand how umbrella and excess policies differ, how they appear on an ACORD 25, and the common gap where the certificate does not show what it needs to.

Both umbrella and excess liability policies sit on top of a contractor's underlying policies and add limits once those are used up. The usual difference is that an excess policy follows the terms of the underlying policy, while an umbrella may have its own terms and can sometimes cover things the underlying policy does not. Exact behavior depends on the policy wording, so treat this as a general guide and read the policy or ask an insurance professional when it matters.

## How they sit above the underlying policies

A contractor's primary policies are usually commercial general liability, auto liability, and employer's liability (part of workers' compensation). An umbrella or excess policy adds a second layer above them. If a claim exceeds the general liability limit, the next layer responds, provided the claim falls within what that layer covers and the underlying limit is exhausted or the policy says otherwise.

## How they differ

- **Excess liability** generally follows form. It adopts the terms of the underlying policy and adds limit. If the underlying policy covers it, so does the excess policy, up to the extra limit.
- **Umbrella liability** may have its own terms. In some cases it broadens coverage beyond the underlying policy, and in some situations it can drop down to respond when an underlying aggregate is exhausted or where the underlying policy does not apply, usually subject to a retention.

In practice the labels are used loosely. A policy called an umbrella can follow form closely, and an excess policy can have its own exclusions. The wording controls, not the name.

## What contracts mean by a minimum

When a contract asks for a $5 million umbrella, for example, it usually means a minimum total of limits above the required underlying coverage. Contracts differ on a few points:

- Whether umbrella and excess are accepted interchangeably.
- Whether the limit must apply per project or in the aggregate across all of the insured's work.
- Whether the umbrella must sit over general liability, auto, and employer's liability, or only some.
- Whether several layers can be added together to reach the number.

Read the subcontract and ask a professional about wording. See [writing subcontract insurance requirements](https://complysub.agntwrk.com/guides/writing-subcontract-insurance-requirements).

## How it appears on the ACORD 25

The ACORD 25 certificate has a section for umbrella or excess liability. It shows the carrier, policy number, effective and expiration dates, and the limits. Two boxes matter:

- **Umbrella or excess:** which type the policy is.
- **Occurrence or claims-made:** an occurrence policy covers events during the policy period. A claims-made policy covers claims reported during the period, often with a retroactive date. Contracts often prefer occurrence, but check yours.

The certificate also shows a retention or deductible amount where one applies. See the [ACORD 25 field by field](https://complysub.agntwrk.com/guides/acord-25-certificate-field-by-field).

## Do additional insured and primary wording follow?

Often the umbrella is written to follow the underlying policy's additional insured and primary and non-contributory terms, but this is not automatic. A certificate that shows these on the general liability line does not prove the umbrella also provides them. Confirm with the policy endorsements or ask the agent. See [primary and non-contributory](https://complysub.agntwrk.com/guides/primary-and-non-contributory).

## The common gap

The most common problem is a certificate that shows an umbrella limit but not how it connects to the underlying policies. Look for these:

1. The umbrella does not list the underlying policies it sits over, or the box for them is blank.
2. It does not follow form, so additional insured, waiver, or primary terms may not carry over.
3. The limit is shared across many projects, so less may be available for yours.
4. It is claims-made when the contract wants occurrence.

For other items to scan for, see [certificate of insurance red flags](https://complysub.agntwrk.com/guides/certificate-of-insurance-red-flags).

## Check this automatically

ComplySub reads the umbrella or excess line on each uploaded ACORD 25 and compares the limit, type, dates, and occurrence or claims-made setting with what you require. It flags a missing or low umbrella and reminds the vendor and their agent. It cannot read the policy form, so confirm follow-form wording with the agent or an insurance professional.

[Try ComplySub free](https://complysub.agntwrk.com/login)

_This guide is general information, not legal or insurance advice. Insurance and licensing rules vary by state, carrier, and contract; confirm what applies to you with your insurance professional, attorney, or licensing board._