Excess liability insurance for trucking: limits above primary

Excess liability insurance for trucking is a second liability policy that sits on top of your main one. Most owner-operators never think about it until a contract shows up asking for a liability limit higher than the one they carry. Here is what excess liability is, how it works with your primary policy, and what to read before you sign.

First, your primary liability policy

Auto liability is the part of your truck insurance that pays for harm you cause to other people in a crash: their injuries and their property. Your policy has a limit. That is the most the policy pays for a covered claim.

This main policy is called the primary policy, because it responds first. Federal rules set a minimum amount of liability coverage for interstate trucking, and many contracts ask for more than the minimum. Our article on liability limits for trucks explains those primary limits.

What excess liability insurance for trucking is

An excess liability policy adds another layer of limit above the primary policy. Picture two boxes stacked up. The bottom box is your primary policy. The top box is the excess policy. A covered claim uses the bottom box first. The top box is there for a covered claim that is bigger than the bottom box.

Two things are worth knowing:

• It is a separate policy. It has its own insurer, its own premium and its own terms. It may be with a different company than your primary.
• It is tied to the policy underneath. An excess policy lists the primary policy it sits over. If the primary policy is cancelled or changed, the excess policy can be affected.

Excess or umbrella: are they the same?

People use the two words as if they were the same, but there can be a difference.

• An excess policy usually follows the terms of the policy below it. Insurance people call this "following form." It adds limit, and it generally does not add new kinds of coverage.
• An umbrella policy can sit over more than one policy, such as auto liability and general liability. Depending on how it is written, it may reach some situations the policies below do not.

The name on the cover does not settle the question. What counts is what the policy says. So the question to ask is: "How does this policy follow my main policy, and where is it different?"

When a contract asks for more

The usual reason to look at excess liability is a contract. A shipper, a broker or a work site may want carriers to carry a certain liability limit before they haul. The amount is different from one contract to the next. There is no single number that every customer asks for.

Before you sign, find the insurance section of the contract and read it slowly. Look for:

• The limit it asks for, and for which coverage. Auto liability, general liability and cargo are different things.
• How the limit can be met. Some contracts accept a primary policy plus an excess policy to reach the total. Others have their own wording.
• Who must be named. A contract may ask to be listed as additional insured or certificate holder. Our article on additional insured vs. certificate holder explains the difference.
• How long it must stay in place.

Then send the contract to your agent before you sign it. It is much easier to check the wording first than to learn later that your policy does not match what you promised.

What to ask about an excess policy

• Which policy does it sit over? Make sure it lists your real primary policy and limit.
• Does it follow form? Ask where its terms differ from the primary.
• What are its exclusions? An excess policy can have its own list.
• Do the dates match? Many people line up the excess and primary policy periods so there are no surprises at renewal.
• Can it be written for my operation? Availability depends on the insurer, your loss history, your freight and your time in business. Not every carrier will be offered every limit.

Mistakes to avoid

• Signing first and asking later. A contract is a promise. Know that you can meet it.
• Assuming excess covers what the primary excludes. An excess policy usually follows the primary. It is more limit, not a different policy.
• Letting the primary lapse. The excess layer depends on the layer underneath.
• Mixing up coverages. A higher auto liability limit does not raise your cargo limit.
• Buying a limit for a single load without a plan. Ask your agent what makes sense for the work you really do.

To see how all the pieces of a truck policy fit together, read our guide to truck insurance coverage explained.

When to call us

Got a contract that asks for a limit above your policy? Call TCZ Insurance Agency at 956-526-6727 and send us the insurance section. We will read it with you and tell you what options the insurers we work with can offer for your operation. We cannot promise that any insurer will approve a limit or what a policy will pay.

Common questions

Is excess liability the same as an umbrella policy? Not always. An excess policy usually follows the policy under it. An umbrella can sit over several policies and may be written more broadly. Read the policy to know which you have.

Do I need excess liability as an owner-operator? Only if your contracts or your own choice call for a limit above your primary policy. Many owner-operators run with a primary policy alone. It depends on who you haul for.

Can I add excess liability in the middle of my policy term? Often you can ask for a quote at any time, but it depends on the insurer. Start early, because it can take time.