Most contracts accept either an umbrella or an excess liability policy. What they care about is the total limit above your general liability, not the label. The difference is that a true umbrella can be a little broader than the policies under it, while a follow form excess policy only mirrors them. So if your contract literally says "umbrella," have your broker confirm the excess policy follows form, or ask the customer to accept it. Who this is for: a contractor whose quote says "excess liability" while the contract says "umbrella," or the other way around.
The short version
- Umbrella and excess liability are both a second layer of coverage that sits above your other liability policies, mainly general liability and auto.
- A true umbrella can be broader than the policies below it and can drop down to cover some gaps.
- A follow form excess policy is written to mirror the policy below it. It is never broader, and it can be narrower, because most excess policies add their own exclusions.
- Most contracts say "umbrella or excess" or "umbrella/excess." Either policy meets those.
- If the contract says only "umbrella," a follow form excess policy usually still works, but confirm it in writing.
What is the difference between an umbrella and an excess liability policy?
Both are a second layer of coverage that sits above your other liability policies. Both pay after your general liability, auto, or employers liability limit is used up. Employers liability is the part of workers comp that pays if an employee sues you. The difference is in how closely the top layer copies the bottom one.
| Feature | True umbrella | Follow form excess |
|---|---|---|
| Coverage compared to the policies below | Can be broader. It has its own wording. | Written to mirror the policy below it, minus any exclusions the excess policy adds. Never broader. |
| Drop down | Can pay a claim the policies below do not cover at all, after you pay a retention (your share first, often $10,000) | No. It pays only after the policy below pays its full limit. |
| Price | Slightly higher for the same limit | Slightly lower, especially in upper layers |
| Who sells it to small contractors | Standard insurers, usually as a package with general liability | Specialty insurers, and any insurer selling the second or third layer of a tower |
| How it shows on your certificate of insurance (the one page summary of your policies) | "Umbrella liability" box checked | "Excess liability" box checked |
In everyday use the words get mixed up, and many policies called umbrellas are really follow form. See umbrella versus excess liability.
What does my contract actually ask for?
Read the line in the insurance section. It will be one of these four.
| Contract wording | Does an excess policy work? | Does an umbrella work? |
|---|---|---|
| "Umbrella or excess liability: $5,000,000" | Yes | Yes |
| "Umbrella/excess: $5,000,000, following form to the underlying policies" | Yes, this wording is written for it | Yes |
| "Umbrella liability: $5,000,000" with nothing else | Usually. Confirm with the customer in writing. | Yes |
| "Limits may be met by any combination of primary and umbrella or excess" | Yes, and your general liability limit counts toward the total | Yes |
The third row is the only one that causes trouble, and even there most customers accept a follow form excess policy once they see it follows the general liability. A good broker asks the customer up front whether an excess policy is fine, or sends the follow form wording along with the certificate.
When does the difference between them actually matter?
Rarely. If a worker is hurt and the claim passes your general liability limit, both types pay the rest. The difference matters in two cases:
- A gap in the policies below. If your general liability excludes something and a true umbrella does not, the umbrella may drop down and pay after your retention. A follow form excess policy will not. This is uncommon, so do not buy an umbrella hoping it fixes a bad general liability policy.
- Wording the customer checks. Some general contractors confirm that the protection your general liability gives them carries into the top layer. A follow form policy usually carries it, unless the excess form adds an exclusion. A true umbrella usually does too, but check.
Which one should I buy?
Buy the one that meets the contract at the best price from an insurer that wants your trade. For a first layer, small contractors usually end up with a true umbrella from a standard insurer or a follow form excess policy from a specialty insurer, and the price gap is small. Upper layers in a big tower are almost always follow form excess. See how a $10,000,000 tower is built.
Whichever you buy, make sure your certificate checks the right box and, for excess, notes that it follows form. See umbrella and excess on a certificate.
What this looks like in real life
Illustrative example. It is typical of what we see and is not a promise of how any specific situation would be handled.
The setup: A steel erection subcontractor in New Jersey with 11 employees wins a $410,000 warehouse package. The insurance exhibit lists "Umbrella Liability: $5,000,000 per occurrence." The only insurers willing to sell $5,000,000 for steel erection offer follow form excess policies.
What went wrong: The general contractor's reviewer rejects the certificate because the "Excess Liability" box is checked instead of "Umbrella."
What it cost: The broker sent the reviewer the excess policy's follow form wording and a one paragraph explanation, and the certificate was accepted two days later. The $5,000,000 excess policy cost about $16,000 to $24,000 a year (illustrative for steel erection in New Jersey, one of the hardest trades to place). No true umbrella was available for the trade at any price the owner could pay.
The fix: The word on the contract is not the coverage. Ask the customer about excess before you buy, or have the follow form wording ready when a reviewer objects.
Frequently asked questions
Q: Does my contract require an umbrella policy, or will excess liability work?
Most contracts accept either, because they care about the total limit above your general liability. If the contract says only "umbrella," a follow form excess policy usually still works, but confirm it with the customer in writing.
Q: What is the difference between umbrella and excess liability?
Both are a second layer above your general liability, auto, and employers liability. A true umbrella has its own wording, can be broader, and can drop down to pay some claims the policies below do not cover. A follow form excess policy copies the policy below it, except where it adds exclusions of its own.
Q: Is an umbrella better than excess liability?
Slightly broader on paper, but for a normal claim they pay the same way. The excess policy is often the only kind available for hard trades or big limits, and it costs a little less.
Q: Will my customer reject a certificate that says excess instead of umbrella?
Occasionally, when the contract says only "umbrella" and the reviewer is strict. Sending the follow form wording and a short explanation from your broker usually clears it. Asking before you buy avoids the problem entirely.
Q: Does an excess policy protect my customer the same way my general liability does?
Usually. Because it follows the policy below, the protection your general liability gives your customer normally carries into the excess layer, unless the excess policy adds an exclusion. Have your broker read the excess form, not just the certificate.
Q: Do umbrella and excess cost the same?
Close. A follow form excess policy is usually a little cheaper for the same limit. Illustrative cost for $1,000,000 of either is $600 to $2,500 a year for most trades, driven by trade, payroll, state, and claims.
How Morrow helps
Morrow is a licensed independent commercial insurance brokerage that works with contractors and trades every day. Matching the umbrella or excess wording in a contract to a policy a reviewer will accept is something we handle on nearly every placement.
- Free contract review. Send us the contract or bid documents and we mark up the insurance section in plain English, whether or not you buy anything from us.
- Free, instant certificates. Clients issue their own certificates of insurance online in about a minute, any hour, any day, at no charge.
- Markets you cannot reach online. One application, shopped across many insurance companies for general liability, workers comp, auto, umbrella, and pollution coverage.
One more thing. This article is general information and is not legal advice or a statement of coverage. Your contract and your policy wording control in every case. Requirements vary by customer, by state, and by insurance company, so have a licensed advisor review your own contract and your own policy before relying on any of it.
Last updated: Reviewed by the Morrow commercial lines team. Last updated September 2026.