The difference in one paragraph
Excess liability follows form — it pays the same way the underlying policy does, just with a higher limit. A true umbrella also sits above the underlying limits but can be broader, sometimes covering claims the primary policy excludes (subject to a self-insured retention). In practice, most small-business 'umbrellas' sold today are follow-form excess policies with an umbrella label, so the wording matters more than the name.
What it costs
Umbrella pricing is driven by the underlying exposures it sits over — GL, auto, and employers liability.
| Limit | Low-hazard business | Contractor / auto fleet |
|---|---|---|
| $1,000,000 | $700 – $1,500 | $1,500 – $4,000 |
| $2,000,000 | $1,200 – $2,400 | $2,800 – $7,000 |
| $5,000,000 | $2,500 – $5,500 | $6,000 – $15,000 |
Choosing a limit
Start with contract requirements — many general contractor, hospital, and municipal agreements specify $2M–$5M total limits, which an umbrella satisfies far more cheaply than raising the primary. Then consider your assets and your auto exposure: any business with vehicles and employees has severity potential well beyond $1M. Jury verdicts in auto cases are the single most common reason a small business exhausts a primary limit.
Schedule of underlying insurance
Your umbrella requires specific minimum limits on the policies beneath it — typically $1M/$2M GL, $1M auto, and $1M employers liability. If you let an underlying limit drop below the schedule, you become self-insured for the difference. Any time you change a primary carrier, send the new declarations page to your broker so the umbrella schedule is updated.
Frequently asked questions
Is an umbrella cheaper than raising my primary limits?
Almost always. Adding a $1M umbrella typically costs a fraction of doubling the underlying general liability and auto limits, and it covers multiple lines at once.
Does an umbrella cover workers' compensation?
No. It sits over employers liability (part B of the comp policy), not over statutory workers' comp benefits.
Does an umbrella cover professional liability?
Only if E&O is specifically scheduled as underlying coverage, which many umbrellas exclude. Check the schedule before assuming.