Does My Nonprofit Need “Umbrella” Insurance?

December 9, 2022
Hand holding red umbrella in the rain

As a nonprofit organization, you must carry liability insurance to protect your company if a risk event occurs. However, you may require additional coverage, which can come in the form of either an umbrella liability insurance policy or excess liability coverage policy.

Umbrella vs Excess – What’s the Difference?

While both policies allow you to increase your coverage limits, Excess Liability covers only that, while and Umbrella provides higher limits, but also may provide additional coverages that your underlying policy does not.  Read below to learn more about both policy types.

Umbrella Insurance Coverage

An umbrella insurance policy covers potential damages and legal defense fees not covered by the liability insurance policies; it also aims to cover any claims beyond underlying liability insurance coverage, such as general and professional liability.

If a claim exceeds the liability limit, the umbrella policy will pay the difference to the claimant. This type of policy may also have additional coverages that aren’t available under a liability policy. The umbrella can cover this loss since no exclusion applies.

Your nonprofit organization needs an umbrella policy to safeguard against potential litigation from members of the public, government entities, employees, and other nonprofit organizations. It protects against catastrophic lawsuits in cases of gross negligence and reckless conduct by members of your organization.

Excess Liability Coverage

An alternative to an umbrella policy is an excess liability insurance policy, which provides higher limits than the primary underlying insurance. Whenever the underlying policy runs out of its limitations, the excess liability coverage fills in the gap and offers an extra layer of security. However, a major difference between an excess policy and an umbrella policy is that an excess policy does not cover claims that would be disallowed by the underlying policy, whereas an umbrella might.

Get Covered with Lamb Insurance Services

The additional coverage provided by Umbrella and Excess policies could be the difference between having full coverage for a claim and significantly impacting your organization’s financial stability. Lamb Insurance Services offers a wide range of protections for nonprofit organizations and their employees. For more information, contact us today.

Lamb recognizes that COVID-19 has created many challenges for nonprofit and human service organizations. That’s why we’ve made it EASY for you to submit changes to payroll for your workers’ compensation policy and vehicle schedule for your auto policies. Click below to proceed with your change requests.