Excess Liability is an additional insurance policy that sits on top of your existing ‘primary’ insurance policy, to provide you with higher limits of cover overall. 

Excess Liability is especially important in the current insurance market, as insurers (in particular for Professional Indemnity and Public Liability) have less capacity to offer higher limits of cover on single policies. If you need a higher limit than what your insurer can offer, particularly for contractual reasons, taking an Excess Liability policy to provide the additional coverage you require can e the solution.  

Excess Liability can be taken on a variety of different insurance products, including, but not limited to; 

• Professional Indemnity 
• Public & Products Liability (otherwise known as General Liability) 
• Motor Liability Insurance 
• Personal Liability under Home Insurance 
• Employer’s Liability Insurance (traditionally under Workers Compensation Insurance)

There are a variety of different circumstances which may lead to the requirement of an Excess Liability policy, such as;

• Higher limits of insurance required contractually 
• Requiring higher limits for certain projects 
• Other additional risk factors resulting in higher insurance exposure 

As an example, you may have a Professional Indemnity Insurance policy with a limit per claim of $5,000,000. This limit may be the maximum that you are able to obtain from your Insurer, but you require a higher limit as you are taking on larger projects and need to ensure you are adequately protected. 

You then secure an Excess Liability policy with another Insurer for an additional $5,000,000 limit of cover. Overall, you are now insured for a maximum of $10,000,000 per claim. 

Using this example, in the event of a $7,000,000 claim against your business, the claim would work as follows; 

• The first $5,000,000 of the claim costs would be covered by your original (or ‘primary’) Insurer
• Any costs incurred over this amount (in this example, $2,000,000) would be covered by the Excess Liability Insurer 
• Overall, the full $7,000,000 claim would be covered across both the Primary and Excess Liability policies

Since Excess Liability insurance sits on top of an existing policy, much of what is covered under excess liability depends on the original policy. Essentially, the Excess Liability policy will provide the same coverage as that of the underlying (or ‘primary’) insurance policy. Therefore, anything that is excluded under the primary insurance policy will also not be covered by the excess liability policy.

In some cases, the Excess Liability Insurer may also impose additional exclusions on the Excess Liability policy for certain aspects of cover that they do not want to follow from the underlying insurance policy. 

It is important to understand that simply taking two policies with different Insurers does not mean that you have ‘double the cover’. Excess Liability Insurance is a specific type of insurance cover, and needs to be set up correctly to ensure you have the overall limit that you require. We would always recommend engaging the services of an Insurance Broker to obtain this type of insurance program.

In order for relevant Insurers to consider whether they can provide Excess Liability Insurance, they will generally require; 

• The Policy Schedule & Policy Wording for the underlying insurance policy 
• A Proposal Form (usually the form provided to the underlying Insurer is adequate) 
• Any other information that was provided to the underlying Insurer to assess the risk 

The Excess Liability Insurer will want to review the full details of the cover that is provided under the underlying insurance policy, to determine whether they are comfortable providing the additional limit in excess of this policy.

To find out more about Excess Liability Insurance, please complete our online form or call us on 1300 932 237.