How does surplus insurance function differently than traditional insurance policies?
What is Surplus Insurance?
Surplus insurance is a form of specialized insurance available for businesses, typically those with large and complex operations, that need to supplement their insurance coverage beyond the traditional limits associated with standard policies. Surplus insurance is designed to provide additional financial protection and to fill any gaps that may exist with an existing insurance policy.
Elements and Benefits of Surplus Insurance
Surplus insurance typically includes the following elements:
- High limits of coverage – Surplus insurance policies offer expansive coverage limits that can exceed the $1 million limit of traditional policies.
- Increased protection – Surplus insurance offers extended coverage to cover potential losses that extend beyond the standard policy limits.
- Greater flexibility – Surplus insurance policies offer flexible coverage options that can be tailored to the individual needs of a business or organization.
Surplus insurance also offers several benefits to companies who need additional financial protection:
- Protection against catastrophic losses – Surplus insurance can provide coverage for unexpected and potentially costly damage due to unforeseen events.
- Enhanced peace of mind – Surplus insurance gives organizations and businesses an extra layer of financial protection so they can plan for the future with peace of mind.
- Protection from contingent liabilities – Surplus insurance can help cover liabilities due to errors and omissions, professional service costs, and other potential risks.
Types of Surplus Insurance
Surplus insurance can come in a variety of forms, including:
- Umbrella insurance – assumes liability for damages above the limits of other existing policies
- Excess liability insurance – offers protection against financial loss due to actual damages
- Director & Officer Liability insurance (D&O) – protects executives, directors, and officers from financial harm due to wrongful acts or alleged wrongful acts
- Employment Practices Liability insurance (EPLI) – helps organizations protect themselves from accusations of wrongful termination and other employment-related issues
When Do Companies Need Surplus Insurance?
Surplus insurance is typically most appropriate for those organizations with a high level of risk and those with high-value operations and assets. Companies may also find a need for Surplus insurance if their operations are particularly complex, international, or involve hazardous activities.
Surplus insurance is a specialized form of insurance that can be an important part of any company’s financial planning and risk management strategy. By providing an additional level of protection, surplus insurance can help organizations and businesses cover any potential gaps in their existing coverage and ensure they are adequately protected.