As a business owner, you need to prepare for the worst. A commercial umbrella policy is insurance for your insurance. When a claim or series of claims hits your business, umbrella coverage can be a lifesaver. Commercial insurance companies advocate businesses of all sizes to consider adding an umbrella policy to their insurance.
Umbrella insurance provides additional liability coverage to help protect you and your assets in the event of a devastating accident or lawsuit.
Extended liability coverage
Without an umbrella policy, you might be on the hook for legal fees, medical bills and damages that exceed the limits of your current coverage.
For example, say a company truck with liability coverage of $300,000 is responsible for a 10-car pileup on a wet road. The damages total $900,000. The commercial auto policy would cover the first $300,000, and the umbrella policy would kick in to pay the rest. You can see how valuable umbrella coverage can be.
Umbrella insurance doesn’t just increase your coverage; it can also broaden your coverage. For example, if your auto liability policy covers accidents in a specific geographic area, an umbrella policy could expand the coverage territory.
Your commercial umbrella policy may have general liability, commercial auto and workers’ compensation policies under it.
Scope of coverage
Business insurance policies that commercial umbrella insurance typically broadens include:
- Commercial general liability
- Commercial auto
- Workers’ compensation
- Product liability
Note that commercial umbrella insurance only covers claims if you have the appropriate underlying policy to start with; it can’t provide brand-new coverage. For example, if you don’t have an existing commercial general liability (CGL) policy, your umbrella insurance won’t cover CGL claims.
Additionally, commercial umbrella insurance commonly excludes certain things, like:
- Commercial property insurance: Doesn’t apply to property insurance claims including equipment, office space or inventory.
- Employee discrimination lawsuits: Doesn’t pay claims or lawsuits arising from unfair or discriminatory employment practices. These are normally insured under employment practices liability insurance.
- Errors and omissions (E&O) and professional liability insurance: Any mistakes or oversights you make in the course of your work are generally covered by E&O and professional liability insurance.
- Claims already covered by underlying policies: Umbrella coverage only kicks in after the limits of the underlying policy are exceeded.
Why you should get umbrella insurance
Here are eight reasons to consider a commercial umbrella policy for your business:
- Your employees are at risk of getting injured on the job. Serious work injuries can trigger lawsuits, and lawsuits can easily exhaust your employer liability coverage.
- Your business is open to the public. Lots of foot traffic means lots of opportunities for mishaps and injuries. These increase the likelihood of expensive general liability claims.
- Your business does work on clients’ property. Service providers such as plumbers, repair people and construction contractors do most of their work on other people’s property. This increases the risk of third-party bodily injury or significant property damage.
- Clients require high coverage limits. If you do certain types of contract work or work for wealthy individuals, clients may require you to carry higher coverage limits than your existing insurance policies provide.
- Employees use their own cars for business. If someone gets into a serious accident, your business could be sued for damages. Your auto coverage may not be enough to cover the claim.
- It costs less than increasing limits on all policies. Umbrella policies are typically reasonable and cover all relevant policies, reducing your exposure to multiple policy premium increases.
- It may provide discounts on underlying policies. Many providers offer discounts when your commercial umbrella insurance policy is with them.
- It covers gaps in some liability options. Umbrella policies may provide liability coverage for vacant property and empty lots where no other coverage is required.
Contact your Conrade insurance professional. Commercial insurance companies like Conrade understand the importance of having complete coverage. They can help you assess your risk exposures and need for umbrella insurance. If you think your business is vulnerable, it’s better to be on the safe side than risk shouldering the cost of a heavy lawsuit.