Protecting your business with insurance coverage is crucial. The appropriate insurance allows your company to mitigate risk, maintain continuity and focus on long-term growth and success.
While a primary -or- professional liability policy offers a solid foundation, it may have limitations when dealing with high-cost claims. This is where an excess professional liability insurance becomes part of your comprehensive coverage.
What is Excess Liability Coverage?
Excess liability insurance serves as an extension of your existing professional liability plans. It is designed to provide additional financial protection in the event of large, unexpected claims or lawsuits exceeding your primary policy’s limits.
Excess liability insurance offers higher limits under the same terms and conditions as the underlying coverage. Hence, the name “excess.” This liability insurance helps safeguard your business from potentially disastrous financial events by acting as an extra layer of security.
Why Obtain Excess Liability Insurance?
Even a single significant claim can lead to legal expenses and settlements exceeding your primary insurance’s limits in today’s litigious environment. Your business assets, operations and financial stability could be protected with excess liability coverage. This additional layer of insurance covers the gap and mitigates the impact of high-cost claims. Excess plans may provide the following benefits:
- Increased Financial Protection: Excess liability coverage serves as a financial safety net by providing additional coverage beyond the limits of primary professional liability policies. This is crucial in scenarios where a catastrophic event or a high-cost claim surpasses the limits of the underlying insurance.
- Protecting Assets: A major liability claim, such as a lawsuit, can pose severe monetary consequences. Excess liability coverage helps safeguard your business assets, including properties, profits and investments, which might be at risk in an unfavorable judgment.
- Legal Defense Costs: Excess liability policies often cover legal defense costs, which can be substantial even if a claim is ultimately deemed without merit. This coverage ensures you have the financial means to defend yourself in court, irrespective of the outcome.
- Contractual Requirements: In certain instances, your business may be required to carry additional limits necessitating excess liability insurance as part of contractual agreements with clients, vendors or partners. Meeting these requirements fulfills contractual obligations and ensures the business is adequately shielded.
- Risk Management Strategy: Excess liability coverage is a key component of a thorough risk management strategy. It demonstrates your due diligence in addressing potential liabilities and helps your business prepare for the unexpected.
- Peace of Mind: Knowing you have extra protection can provide peace of mind. This sense of security lets you focus on your business operations without constantly worrying about potential financial repercussions from unforeseen events.
Which Companies Need Excess Liability Coverage?
While all businesses should have some form of commercial insurance, several types of companies benefit from excess professional liability plans. Primarily, businesses with significant assets or those operating in high financial exposure service industries, such as accountants, law firms, insurance brokers and wealth managers, often need this supplemental coverage. These industry segments are subject to escalating legal expenses and social inflation of jury awards. In essence, any business that faces substantial financial liability exposure beyond what primary policy limits will cover should consider excess professional liability insurance.
Callahan Risk
Obtaining the right insurance coverage and working with the risk and insurance services provider is especially important when the product is as complicated and highly specialized as an excess liability insurance policy.
Our clients find the quality of our service and the creativity of our solutions to be a welcome change from the norm. They know they can count on Callahan for insurance solutions as their businesses grow and face challenging market conditions.
Call Callahan Risk today.
