Are Umbrella and Excess Policies Interchangeable?

Yes, essentially they both provide higher limits of liability insurance coverage in addition to the underlying General Liability, Auto Liability and Worker’s Compensation Employer’s Liability policies. The difference between an umbrella policy and excess liability policy is that the umbrella policy could have broader coverage than the underlying General Liability, Auto Liability and Employer’s Liability. The excess liability policy is typically a “follow form” policy that will provide the same coverages / exclusions as the underlying General Liability, Auto Liability and Employer’s Liability policies.

Who Should Have an Umbrella Policy?

Typically an insurance buyer should always prefer to have a true umbrella policy if they can find one that is priced competitively. Sometimes the insured cannot obtain an umbrella policy and can only get an excess liability policy due to their business operations (high hazard versus lower hazard), poor loss experience or state in which they do business.

Who Should Have a Commercial Excess Liability Policy?

If an umbrella policy is not available in the marketplace, the only solution for higher limits of coverage are through an excess liability policy. The coverage is basically the same as an umbrella so not a lot of concern by going this route.

What Determines my Umbrella Insurance Cost?

The umbrella & excess liability policies are priced as a function of the premium of the underlying General Liability, Auto Liability or Employer’s Liability policies. So, if the insured adds more vehicles to their auto policy during the term their auto liability premium will go up, which will in turn increase the cost of the umbrella policy’s premium. Losses, new states of business operation with tougher legal climates, and the insurance company’s actuarial loss experience across their book of business can also impact the pricing on the umbrella or excess policies.

What Determines my Excess Liability Insurance Cost?

The same factors as the umbrella policy’s premium. Over the last couple of years, many insurance carriers have cut their umbrella capacity. For example, in 2020 they might have been able to purchase a $5M policy limit from their carrier, and in 2022 their carrier would only offer $2M, so they would have to approach an alternative excess liability market for the additional $3M in coverage that they need to satisfy their customer’s requirements. The shrinking market capacity has resulted in fewer carrier options and less competition among carriers which has caused the pricing to go up drastically. There have also been a great deal of “nuclear” claims verdicts in the insurance carrier’s auto liability experience which has caused increased claims activity in the umbrella markets. All of these factors have made it increasingly more expensive to achieve the desired limits of excess liability. We do not see an end in sight and expect these results to continue in the years to come.

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Commercial Excess Liability Coverage vs Umbrella Liability Coverage

As a business owner, one of the most important things to understand about insurance is that not all types of coverage are created equally. Case in point: commercial excess liability and umbrella insurance. What are the major differences between each one and which is right for your business? The answers to those questions are straightforward, but they also require you to understand a few key things about these policies in general.

What is an Underlying Policy?

In the insurance field, the term "underlying policy" simply refers to all insurance policies that provide coverage against the type of risks that businesses are likely to face on a daily basis. Commonly, this is used to describe the primary policy that protects an organization from things like liability claims. You pay a certain amount of money per month for a set amount of coverage (also referred to as your "limit") and you get to rest easy knowing that even if something devastating happens, you're still covered from a potentially catastrophic financial fallout.

What is Commercial Excess Liability Coverage?

Commercial excess liability insurance, as the name implies, extends the limits of an underlying policy. It doesn't change the amount of coverage that you have from your existing liability insurance. Rather, it simply offers additional coverage up to whatever the amount is that you've chosen to purchase.

All told, this is a type of insurance protection intended to cover unexpected events that could be financially devastating to your business. These include things like damage resulting from automobile accidents in company vehicles, liability claims, and more.

What is Commercial Umbrella Insurance?

In a commercial setting, umbrella insurance is a type of policy that helps to cover any claim that may be larger than the limits of a pre-existing underlying policy. If you have a general liability policy with a $100,000 limit and a claim is filed for $150,000, for example, that umbrella insurance policy would kick in at a certain point and help account for the difference.

Depending on the situation, this additional coverage can help with the costs of a wide range of different things. These include but are not limited to scenarios like:

Legal bills
Medical expenses
Expenses related to damage to someone else's property
Judgments
Settlements
Class action product and construction lawsuits
And more

Find What's Right for Your Business

At BIS Benefits, we understand that there is no "one size fits all" approach to obtaining the right insurance coverage or your business. Every organization is unique, which is why you must first find a partner who is capable of pulling together the coverage you need to account for your specific risks. Only then will you be able to guarantee you have the protection you need when you need it the most.

If you'd like to find out more information about commercial excess liability vs umbrella insurance, or if you have any additional questions you'd like to speak to a professional about in more detail, please don't delay - contact BIS Benefits today.

Commercial Excess Liability and Umbrella Insurance FAQ

Are Umbrella and Excess Policies Interchangeable?

Yes, essentially they both provide higher limits of liability insurance coverage in addition to the underlying General Liability, Auto Liability and Worker’s Compensation Employer’s Liability policies. The difference between an umbrella policy and excess liability policy is that the umbrella policy could have broader coverage than the underlying General Liability, Auto Liability and Employer’s Liability. The excess liability policy is typically a “follow form” policy that will provide the same coverages / exclusions as the underlying General Liability, Auto Liability and Employer’s Liability policies.
Who Should Have an Umbrella Policy?

Typically an insurance buyer should always prefer to have a true umbrella policy if they can find one that is priced competitively. Sometimes the insured cannot obtain an umbrella policy and can only get an excess liability policy due to their business operations (high hazard versus lower hazard), poor loss experience or state in which they do business.
Who Should Have a Commercial Excess Liability Policy?

If an umbrella policy is not available in the marketplace, the only solution for higher limits of coverage are through an excess liability policy. The coverage is basically the same as an umbrella so not a lot of concern by going this route.
What Determines my Umbrella Insurance Cost?

The umbrella & excess liability policies are priced as a function of the premium of the underlying General Liability, Auto Liability or Employer’s Liability policies. So, if the insured adds more vehicles to their auto policy during the term their auto liability premium will go up, which will in turn increase the cost of the umbrella policy’s premium. Losses, new states of business operation with tougher legal climates, and the insurance company’s actuarial loss experience across their book of business can also impact the pricing on the umbrella or excess policies.
What Determines my Excess Liability Insurance Cost?

The same factors as the umbrella policy’s premium. Over the last couple of years, many insurance carriers have cut their umbrella capacity. For example, in 2020 they might have been able to purchase a $5M policy limit from their carrier, and in 2022 their carrier would only offer $2M, so they would have to approach an alternative excess liability market for the additional $3M in coverage that they need to satisfy their customer’s requirements. The shrinking market capacity has resulted in fewer carrier options and less competition among carriers which has caused the pricing to go up drastically. There have also been a great deal of “nuclear” claims verdicts in the insurance carrier’s auto liability experience which has caused increased claims activity in the umbrella markets. All of these factors have made it increasingly more expensive to achieve the desired limits of excess liability. We do not see an end in sight and expect these results to continue in the years to come.

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What Employee Benefits Do Georgia Workers Want in 2025?

by Drew Holley • 17 January 2025

Key Insights on Employee Benefits for Small Businesses in Georgia Employee benefits play a pivotal role in attracting and retaining talent, particularly for small businesses striving to compete with larger corporations. BIS Benefits has partnered with Mployer Advisor to bring you an exclusive 2025 Employee Benefits Benchmarking Report, tailored specifically for businesses in the South Atlantic region with 25–49 employees. This blog highlights key findings from the report and how they can help you craft a competitive benefits strategy. Want to dive deeper? Download the full 2025 Employee Benefits Benchmarking Report to gain actionable insights and trends tailored for businesses like yours. Key Findings from the 2025 Employee Benefits Benchmarking Report 1. Medical Benefits: Affordability and Trends 76% of employers in the South Atlantic region offer medical benefits, with 63% of employees enrolling. On average, small businesses contribute $580 per month for single coverage and $707 for family coverage —in line with regional benchmarks. High-deductible health plans (HDHPs) with health savings accounts (HSAs) are gaining traction as cost-saving options. What this means for your business: Offering at least one affordable plan option with employer contributions around regional averages helps you stay competitive in the labor market. 2. Supplemental Benefits: A Strategic Edge Dental and vision benefits are offered by over 80% of employers in this cohort, with high employee enrollment rates of 98% and 93%, respectively. Life insurance payouts are commonly structured as multiples of earnings, with the majority of plans offering 1–2x salary coverage. Voluntary benefits such as critical illness and accident insurance are being increasingly adopted to attract talent without significant cost increases. Takeaway: Supplemental benefits can enhance your overall offering without breaking your budget. Highlight these options to potential hires to differentiate your package. 3. Retirement and Financial Benefits: Securing the Future 91% of employers offer defined contribution retirement plans (e.g., 401(k)), with 74% of employees participating. Employer matching contributions average between 4%–6% , a vital component in employee retention. Auto-enrollment and auto-escalation features are becoming standard, simplifying the process for employees and increasing participation. Action Step: Ensure your retirement plan includes competitive matching and user-friendly features like auto-enrollment to boost engagement. 4. Leave and Flexibility: Meeting Modern Expectations Consolidated leave programs (combining sick, vacation, and personal days) are offered by 69% of employers , reflecting a trend toward greater flexibility. Remote work options and flexible schedules are growing in popularity, with 40% of businesses offering work-from-home arrangements . How to stand out: Consider adding or expanding remote work policies and flexible scheduling to meet employee expectations in 2025. Why Download the 2025 Employee Benefits Benchmarking Report? This comprehensive report provides: Regional and national comparisons to help you understand how your benefits stack up. Detailed insights into cost-sharing, plan designs, and employee preferences. Actionable data on emerging trends like HDHPs, flexible leave policies, and wellness programs. The report equips Georgia small businesses with the knowledge needed to craft a competitive benefits package that aligns with employee needs and business goals. Download the Report Today Don’t miss out on the opportunity to gain insights that can transform your benefits strategy in 2025. Download the full report here by entering your email address and receive actionable data to help your business attract and retain top talent.

HDHPs: How High Deductible Health Plans Can Save Money for Employers and Employees

by Drew Holley • 6 January 2025

High Deductible Health Plans (HDHPs) are transforming how employers and employees manage healthcare costs. By offering lower premiums and pairing seamlessly with Health Savings Accounts (HSAs) , HDHPs provide a strategic way to save money while maintaining access to quality healthcare. In this article, we’ll explore how HDHPs work, their benefits for employers and employees, and how to maximize their potential. To learn more about the benefits of HDHPs and related options, visit our Group Benefits page . What Are HDHPs? HDHPs are health insurance plans characterized by higher deductibles and lower monthly premiums. These plans encourage smarter healthcare spending, as individuals must pay for medical expenses out-of-pocket until their deductible is met. A significant advantage of HDHPs is their compatibility with HSAs. HSAs allow employees to save pre-tax dollars for qualified medical expenses, reducing taxable income and providing a long-term financial safety net. Unlike Flexible Spending Accounts (FSAs), HSA funds roll over year after year, making them an ideal savings tool. To better understand the differences between HSAs and FSAs, check out our detailed guides on Health Savings Accounts and Flexible Spending Accounts . The Employer Advantage: Cost Savings and Competitive Benefits Employers benefit significantly from HDHPs because they reduce overall premium costs while providing employees with greater flexibility. These plans can be part of a larger strategy to attract and retain top talent, especially when paired with proper education about HSAs. Offering HDHPs demonstrates a commitment to cost-effective, forward-thinking benefits management. Businesses can tailor these plans to align with workforce needs, ensuring employees feel supported while keeping costs under control. For help designing a comprehensive benefits package, visit our Group Benefits page for insights on tailoring solutions for your team. The Employee Advantage: Affordable and Flexible Coverage For employees, the main draw of HDHPs is their affordability. With lower premiums, employees can save on monthly healthcare costs while taking advantage of HSAs to manage out-of-pocket expenses. HSAs offer employees tax savings, flexibility, and long-term benefits, making them an excellent choice for those planning for future healthcare needs. This is especially valuable for individuals and families who don’t anticipate frequent medical expenses but want to ensure coverage for unexpected costs. Learn how to maximize your savings with our guide to Health Savings Accounts , a vital companion to any HDHP. Key Differences: HSAs vs. FSAs While both HSAs and FSAs offer tax advantages, they differ significantly in how funds are managed. HSAs allow for funds to roll over indefinitely and are owned by the employee, even if they change jobs. FSAs, on the other hand, are subject to the "use it or lose it" rule, meaning unspent funds may be forfeited at the end of the year. Employees using FSAs should familiarize themselves with rollover and grace period options to avoid losing money. To better understand how these accounts compare, check out our Flexible Spending Accounts overview . Industry Trends: HDHPs Are Gaining Momentum HDHPs are increasingly popular across various industries, from technology to manufacturing. Businesses see these plans as a way to manage rising healthcare costs while still offering competitive benefits. As employers look for cost-effective solutions, HDHPs stand out as a forward-thinking option that balances affordability with quality. Pairing HDHPs with educational resources ensures employees feel confident in navigating their healthcare choices. Key Takeaways For Employers: HDHPs lower premium costs while providing flexibility for employees. For Employees: When paired with HSAs, HDHPs offer significant tax advantages and long-term savings opportunities. For Everyone: Understanding the differences between HSAs and FSAs is essential for making informed benefits decisions. Whether you’re an employer or employee, HDHPs can be a game-changer for managing healthcare costs. To explore how these plans fit into your benefits strategy, visit our pages on Group Benefits , Health Savings Accounts , and Flexible Spending Accounts .

Drew Holley and Jessie Couch Discussing HSA and FSA

FSA vs HSA | Which One is Best for your Georgia Employees?

by Drew Holley • 12 December 2024

Use It or Lose It? Demystifying FSAs and HSAs Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) are popular options for managing healthcare expenses while enjoying some tax benefits. However, these two accounts differ significantly in how unused funds are handled at the end of the year. This difference can impact your financial planning and overall healthcare strategy. In this article, we'll delve into the "use it or lose it" concept, explore how it applies to FSAs, and compare it with HSAs, highlighting why it's important to understand these rules when making your benefits choices. For more information on HSAs and FSAs, watch the full episode of the BIS Podcast here or below. FSAs and the "Use It or Lose It" Rule FSAs have traditionally been governed by a "use it or lose it" rule. This means that any unspent funds in your account at the end of the year would be forfeited. This requirement made it crucial for employees to accurately estimate their healthcare costs and spend all allocated FSA funds before the year ended. However, since the introduction of the Affordable Care Act (ACA), things have changed. Today, many employers offer more flexibility with FSAs. Thanks to the ACA, employers may now allow employees to carry over a limited amount of unspent funds from one year to the next—originally $500, now adjusted for inflation to about $650. Alternatively, some employers may offer a grace period of up to two and a half months after the end of the plan year to use any remaining funds. It’s important to know what rules apply to your FSA so that you don’t leave any money on the table. To learn more about maximizing your benefits options, check out our guide on employee benefits strategy . HSAs: A Different Story Unlike FSAs, HSAs do not follow the "use it or lose it" rule. Funds contributed to an HSA remain in the account year after year, regardless of whether or not you use them. This is one of the key benefits of an HSA—you can build up savings over time to cover future medical expenses. Plus, the funds in an HSA are portable, meaning you take them with you if you change jobs or retire. This makes HSAs a valuable tool for long-term healthcare planning. If you're considering switching to a High Deductible Health Plan (HDHP) to become eligible for an HSA, it’s important to weigh the pros and cons. For more information about HDHPs and their compatibility with HSAs, check out our Health Savings Account service page . Making the Most of FSAs and HSAs Whether you choose an FSA or an HSA, it’s important to understand how to make the most of these accounts. For FSAs, knowing your employer's specific rules about rollover and grace periods can help you avoid losing funds. For HSAs, the focus should be on maximizing contributions, as the funds will continue to grow tax-free, providing a cushion for future medical needs. Both FSAs and HSAs can be used for a wide range of eligible expenses, including medical, dental, and vision care. If you want a comprehensive overview of your coverage options, our group health insurance page is a great resource. Additionally, if you work in a specialized industry like construction or technology, it's beneficial to explore options that are tailored to your needs. Industries like construction and technology have unique challenges that may impact the type of coverage you choose, including how you use tax-advantaged accounts like FSAs and HSAs. Key Takeaways About FSAs, HSAs, and the "Use It Or Lose It" Rule: FSAs : Historically governed by a "use it or lose it" rule, thanks to the ACA, employers may now allow employees to carry over a limited amount of unspent funds from one year to the next—originally $500, now adjusted for inflation to about $650. Be sure to understand your employer's policies. HSAs : Funds roll over year after year and are portable. HSAs offer significant long-term savings opportunities, particularly for those on HDHPs. Plan Carefully : Knowing how these accounts work can save you money and help you better prepare for healthcare costs now and in the future. To get more insights into how you can make the most of your employee benefits, visit our resources page and discover helpful tools to make informed decisions for yourself and your family.