Excess or Umbrella insurance refers to additional limits of (usually) liability insurance placed over a basic "Primary" or "Underlying" policy, usually in increments of $1 Million. (This is usually much more cost-effective than trying to raise the limit on a $1 Million policy to higher levels, due to a number of very boring underwriter concerns.)  A $1 Million primary or basic policy plus a $1 Million excess or umbrella policy effectively produces a total $2 Million insurance limit.

The term "Umbrella" is still in use and originally was a sort of descriptive term for a much broader policy which would, subject to a deductible (retention) cover losses which the primary or basic policy did not cover. This was a big selling point & umbrella insurers began to find themselves saddled with claims for which there was no responsive first-dollar insurance. Those claims led most underwriters to apply new exclusions essentially parroting what was on the primary policies they were written over. The net result is that policies still referred to as "Umbrellas" are laden with so many common exclusions that the insurance they provide is often not much different from the primary policies they're written over, and serve only to provide additional amounts of insurance, rather than a true "Umbrella" feature.



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