Imagine your business is named in a liability claim resulting in a $2 million settlement. You have general liability insurance, but with a $1 million limit. Where would the additional $1 million come from to pay the settlement? It would have to come from your business assets, even if you had to entirely liquidate them.
While these cases don’t happen every day, they do happen. Consider the number of clients, suppliers, partners and other business associates that you come into contact with in the course of your daily work, and the amount of risk those relationships bring with them. Would your existing commercial insurance policies be able to protect you in every case? Probably not. That’s where commercial umbrella insurance comes in.
Commercial umbrella insurance, or umbrella excess liability insurance, provides an extra layer of security for your business. It is supplementary coverage for the costs associated with lawsuits, legal fees and settlements, and it is appropriate for any company that needs additional liability coverage.
Coverage: Commercial umbrella insurance provides protection for costs stemming from lawsuits, legal fees, court awards and out-of-court settlements. These can amount to far more than what is covered by your general liability or other commercial insurance policies.
Exclusions: Most commercial umbrella policies exclude protection for errors and omissions claims, professional liability, product recalls, workers compensation claims and coverage for asbestos-related claims, pollution, war and terrorism.
Limits: Commercial umbrella policies typically provide $1 to $5 million in excess liability coverage, and are appropriate for business owners with significant assets or who may be susceptible to lawsuits.
Commercial umbrella insurance adds another layer of protection to any of several other policies you might have, including commercial general liability, employer’s liability, and hired and non-owned auto liability. It is the most affordable way to get higher policy limits on several other small business insurance policies, rather than raising the limits on each of the other policies individually, which would be far more costly. Rather, you can add additional liability coverage that applies to all of your other policies (except as noted above) through a single umbrella policy.
How much commercial umbrella insurance do you need? That depends upon the type of business you own, the coverage you already have and the assets of your business. We can work closely with you to analyze your risks and help you get the right amount of coverage to protect your business assets.
Do you own a business? Do you have a commercial umbrella policy as part of your overall business insurance portfolio? Why or why not?