Commercial General Liability insurance vs Umbrella policy

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What is Umbrella Insurance?

Owning a business can be an extremely rewarding life experience. However, running a successful business also comes with a lot of uncertainty. When it comes to risk and how you will respond to it, it is essential to know where your vulnerabilities are and how to fix them. One way to ensure that you are properly protected is to have Umbrella Liability insurance. Like the name, Umbrella insurance is an extra policy that sits over top of your General Liability insurance, and other insurances if applicable. Your General Liability will be the first place to look when an unfortunate claim arises. If the limit on your General Liability policy is not enough, or it is denied, you can look to your Umbrella Liability policy. Let's take a look at how the Umbrella insurance works.

What Does Umbrella Insurance Cover?

Just like a real umbrella protects us from rain, Umbrella Liability insurance can protect you from huge financial losses. It is critical to understand all of the inclusions, and even exclusions, that your policy offers.

  • More Coverage Limits - If your General Liability, Employers Liability, or Auto Liability limits are exhausted during a covered claim, you can tap into the limit on your Umbrella policy. Keep in mind the policy must be listed on the Umbrella policy as an underlying limit, and the limit must be completely exhausted before the Umbrella Insurance can be triggered. For example, if a third party walks into your business and slips on a wet floor and ends up needing a lot of medical attention and physical therapy causing them to miss work, or worse, you could see a lawsuit easily in the seven figures.

  • Where GL Excludes - Depending on your policy, the Umbrella can cover certain claims that may be excluded with the underlying policies. Be sure to check your insurance companies policy as these exclusions/inclusions can vary.

What Does Umbrella Insurance Not Cover?

Remember, if you step out from under the umbrella, the rain will get you wet, so possibly even the most crucial aspect of the Umbrella policy to be aware of is the exclusions.

  1. Commercial Property insurance - Umbrella Liability insurance is just that...liability. That means no property coverages can be found here.
  2. Professional Liability - Umbrella insurance will not sit on top of an Errors and Ommissions policy either. If you are worried about this, purchase higher limits on your Professional Liability policy.
  3. Something already covered - An Umbrella policy won't pay for the Commercial General Liability CGL claim that is covered already unless the limit is exhausted, so you can’t place a claim under the Umbrella instead of the CGL. Additionally, you must have the policy as an underlying listed on the Umbrella. Without it, the claim will be denied. You must always look to the underlying policies for coverage first.

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How Are General Liability and Umbrella Insurance Connected?

Your General Liability insurance policy is going to be the first to respond in the event of a liability claim. The Umbrella policy will then be excess. You can't have the Umbrella policy respond without the GL policy, so they go hand in hand.

Business Insurance

Running a business is challenging enough without having to worry about lawsuits, employee injuries or property damage. Having the right insurance gives you the peace of mind to focus on what matters - running your business.

The coverage you need depends on the type of business you run. A restaurant owner needs to be covered against customers possibly getting food poisoning while an accountant needs to be covered against calculation errors. CoverWallet's intelligent assessment system will identify the insurance you need based on your specific business, get you a policy that fits your budget, and do it all in less time than you think.

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