What Umbrella Insurance Is All About:
If you’re a business owner, you know that most things that come with running a business are not certain.
You might think you have everything you need, to ensure total insurance coverage, but the truth is many of your policies only cover a certain amount of damages. Even worse, there may be gaps in your insurance coverage, which means your company may end up incurring unexpected costs. Unfortunately, your typical Commercial Liability Insurance policy won't cover everything. If only there was a sort of "insurance umbrella" for those rainy days.
Looking for extra coverage? Let us introduce you to Commercial Umbrella Insurance. The insurance that helps you keep calm while your business carries on.
Read on to see if this insurance is right for your business.
What Is Umbrella Insurance?
Bad things happen every-single-day, and it’s impossible to know exactly how much coverage you might need to handle issues. When unanticipated situations arise, Commercial Umbrella Insurance offers an additional level of financial security. These umbrella coverage policies are designed to provide additional coverage which fills in the gaps between existing policies and takes over when the coverage on your existing policies deplete. Any business or organization interested in extending their current liability coverage and gap protection may wish to inquire about business Commercial Liability Umbrella Insurance.
Umbrella Insurance for businesses is designed for those areas you may not be considering. Whether you're in need of small business Umbrella Insurance, or a policy for your medium or large business, an Umbrella Insurance policy is designed to help keep your business up and running. Umbrella Insurance is like a safety net for unexpected liability costs.
Do I Need Umbrella Insurance?
Business Umbrella Insurance is not generally a requirement for businesses. After all, some business owners may consider this policy to be an unnecessary expense. However, there are some situations in which having this type of policy may be considered especially advantageous:
- If you're in a high-risk or high liability industry: Professionals who run high risk or high liability businesses or have employees who are in danger, such as the legal trade, may invest in Umbrella Insurance to protect themselves against professional liability suits.
- If you're interested in expanding your existing coverage limits: Policyholders who want to extend the coverage of multiple policies may find it both more convenient and less expensive to expand them all at once through an Umbrella Insurance policy.
- If you're concerned about potential gaps in your coverage: Umbrella Insurance policies offer an additional layer of protection by providing insurance for liability issues that may fall into coverage gaps.
Still not sure what you need?
CoverWallet's Insurance Checklist , you'll find a list of insurance types needed for your specific business or industry.
What Does Umbrella Insurance Cover?
At a High Level...
This insurance can cover you for a wide-range of things including excess liability and coverage gaps.
Getting Into the Details...
To get a better understanding of how this insurance works and what it covers refer to the table below. It covers claims and examples to help you get to know this insurance and decide if it's right for your business.
|Type of Claim||Description||Example|
|Excess Liability||Umbrella insurance will cover any excess liability over the coverage caps of your basic insurance policies. These policies may include Commercial Automobile, Professional Liability, and General Liability. A Commercial Umbrella policy will only kick in once these basic policies have hit their coverage caps. It essentially acts as additional coverage over the other covered amounts.||Your business has an existing Commercial Automobile insurance policy that covers up to $20,000 of liability. One of your employees gets into an accident, which will has resulted in $30,000 worth of damages. Luckily, you had Insurance that covered $50,000 towards Commercial Automobile claims. $20,000 worth of these damages will be associated with your existing Commercial Automobile insurance policy while your Commercial Umbrella policy will cover the remaining $10,000. Otherwise, the $10,000 would need to be paid by your business directly.|
|Coverage Gaps||An umbrella liability policy also covers a broader scope of liabilities that may fall into a gap. This can include a variety of legal fees and costs related to issues, such as libel and slander. These forms of coverage may differ depending on the specific policy you decide to go with.||As a lawyer, you occasionally find yourself dealing with difficult clients. A dissatisfied client has started to post information that is damaging to your reputation. Though you have Professional Liability insurance and Errors & Omissions insurance, none of your existing insurance policies cover libel and slander. Luckily, your Umbrella insurance policy does cover libel and slander under its gap coverage. Your Umbrella insurance policy will cover the costs of fighting these issues up to its coverage cap even though there isn't an existing policy to extend.|
You'll Know It's the Right Policy If It Covers:
This insurance will usually specify the underlying policies that it covers. These policies may include:
Underlying Policies: What's Covered?
- Commercial Auto Insurance covers collision, property, and bodily damage regarding company vehicles or driving that is done by employees for the purposes of business operations.
- General Liability Insurance protects a business from claims regarding property damage, personal injury, and bodily injury, either on business premises or due to business operations.
- Employer's Liability Insurance is designed to cover issues related to an employee's work-related injuries or diseases, in addition to a Workers Compensation policy.
- Professional Liability Insurance is also often called Errors and Omissions insurance (E&O) and is designed to protect an individual from mistakes that may occur during the course of their professional operations.
Coverage Gaps: What's Covered?
This insurance will cover a variety of gaps that will usually be specified by the policy. These liability issues may include:
- Personal injury cases which may cover any bodily damage that falls under a company or professional's liability but is nevertheless not specifically covered under existing policies.
- Lawsuits and legal fees may include any business-related legal costs and associated legal damages that are otherwise not connected to an existing insurance policy, such as slander and libel.
- Rented services and contracts may invoke liability that is not covered directly underneath an existing insurance policy, such as a rental automobile that was taken outside of an existing coverage zone.
What Does Umbrella Insurance Not Cover?
These policies are written to cover specific insurance policies. Consequently, a Commercial Umbrella Insurance policy can theoretically cover virtually any form of liability insurance. Regardless, there are forms of liability that are not covered:
- Punitive damages: Punitive damages are awarded by courts as a form of punishment regarding something that the business has done to injure another entity. Umbrella policies will not cover punitive damages.
- Personal liability claims: Commercial Umbrella Insurance is only applicable for professional's business; it cannot be applied to any personal liability claims. If a lawyer within a legal firm is suffering from personal issues of libel and slander, they will not be able to cover their associated costs with their commercial umbrella policy.
What Are the "Limits" of Umbrella Insurance?
A Commercial Umbrella Insurance policy has a single coverage limit through which all associated insurance policies may draw. Though multiple insurance policies may be able to pull from an Umbrella Insurance policy, they will all deplete the total amount of additional coverage offered. Thus, if a company has a $5 million Commercial Umbrella Insurance policy and must initiate a $1 million excess liability Commercial Auto insurance claim against it, it will only have a remainder of $4 million in coverage for any subsequent claims.
How Much Does Umbrella Insurance Cost?
The premiums for a Commercial Umbrella Insurance policy will vary significantly based on the amount of coverage desired and the number of policies overwritten. This insurance policy can cover a few core insurance policies, or it can be designed to cover every insurance policy the business maintains. The larger the company, the more expensive the Commercial Umbrella Liability Insurance cost will be. The key factors for cost are based on the size of the business, the umbralla coverage limits, and the policies that are in place. However, the mitigation of potential risks helps justify the Umbrella Insurance policy cost An Umbrella Insurance policy quote is the best way to determine how much your business will pay.