Primary Insurance Vs Excess Insurance

One of the most important things you can do as a small business owner is make sure you have enough insurance coverage in case of a claim or lawsuit against you. Liability policies will go a long way in protecting you, but do you know if there are gaps in your current commercial insurance policy? There might be, so it’s crucial to know whether you might need excess insurance to supplement your primary insurance policies. 

Primary Insurance

gold medal with the number one on the front
Primary insurance first responds to a claim, but it might not cover the full amount of the claim.

A primary insurance policy is the first policy to respond to a loss or claim made against your business. Professional liability insurance and general liability insurance policies are considered primary insurance, and are great ways to protect your business against losses. But these primary plans might not cover the full amount of a claim if the claim amount exceeds the policy’s limits. 

For example, if a customer comes into your store and is injured slipping on a spill that was not cleaned up and had no warning sign, they can sue you for the cost of their medical bills. If you are found responsible for the claim against you, your general liability insurance will pay up to your policy’s limit – for example, $1,000,0000. But if the settlement is $1,400,000, what happens? You would have to pay the rest out-of-pocket, which could cost you your business.

Excess Insurance 

In order to avoid the above situation, you can choose to purchase excess insurance. When your  primary policy cannot pay a claim in full because it exceeds the limits of your policy, your excess  insurance kicks in. The primary purpose of excess insurance is to close gaps in coverage and offer another layer of protection. To get back to the example from earlier, if you had excess liability insurance in that case, the $400,000 you would’ve had to pay out of pocket would now be covered. Umbrella insurance is a common type of excess insurance policy.


In certain states,  you can stack your primary and excess insurance policies together. What this means is that you can add them together to create a higher total amount of coverage. For example, if your primary policy has $800,000 worth of coverage and your excess policy’s limit is $1,000,000, then your total available amount for a claim would be $1,800,000. If you cannot stack  policies, you would first have to exhaust your base policy of $800,000, and then the total available coverage of your $1,000,000 excess policy would be $200,000.

map of the US with the states in different colors.
Some states will allow you to stack policies so you get more coverage for a claim.

The states that allow stacking are:

  • Alabama
  • Colorado
  • Florida
  • Georgia
  • Kentucky
  • Mississippi
  • Missouri
  • Nevada
  • New Jersey
  • North Carolina
  • Oklahoma
  • Oregon
  • Pennsylvania
  • Rhode Island
  • South Carolina
  • Texas
  • West Virginia

Need Help?

Do you have a primary policy and/or an excess policy? Do you need help finding policies that will completely protect your business? If you need a new plan or just more coverage, EZ.Insure can help. We will go over your business’s needs and make sure that it is fully protected in any eventuality. Our agents work with the top-rated insurance companies in the country and can compare quotes in minutes to find a comprehensive plan while still saving you money. To get free instant quotes on small business insurance plans in your area, enter your zip code in the bar above, or to speak to one of our licensed agents, call 888-615-4893.

About The Author:
Cassandra Love

With over a decade of helpful content experience Cassandra has dedicated her career to making sure people have access to relevant, easy to understand, and valuable information. After realizing a huge knowledge gap Cassandra spent years researching and working with health insurance companies to create accessible guides and articles to walk anyone through every aspect of the insurance process.

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