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Commercial Umbrella Insurance which is sometimes referred to as “Umbrella Liability Insurance” is essentially a special type of casualty insurance that is designed to supplement the underlying primary insurance policies. It works with other policies such as general liability, and auto liability, to help cover costs of things like legal fees, damages, and medical expenses.
It helps cover any potential gaps in existing coverage and any possible exclusions written into the primary liability policy. It is essentially extra coverage that’s not legally required. Though it certainly provides your company with an extra layer of protection against the unforeseen.
What Isn’t Covered by Umbrella Insurance?
Commercial umbrella insurance does not affect certain policies. For instance, it cannot provide additional coverage for a professional liability policy. It also cannot protect you in the case of punitive damages or the cost incurred by a product recall. It also cannot cover your company from losses if you are accused of pollution, or if you suffer a data breach.
How Umbrella Liability Different From Personal Umbrella Insurance?
Commercial umbrella insurance is specifically designed to help protect a business or corporate entity against liability, general liability, commercial auto, and workers’ compensation. A personal umbrella liability insurance policy specifically provides extended coverage for an individual.
How Much Does Commercial Umbrella Insurance Cost?
At first glance, there is no hard and fast figure for an umbrella insurance cost. Especially for policies where you need umbrella coverage to meet contractual obligations. Other factors that can influence to cost of a policy include
- The number of employees
- The average risk exposure of the industry
- The risk of property damage
- The risk of third-party bodily injury
Does My Business Need A Commercial Umbrella Insurance Policy?
If you are leasing a site on a commercial property, or your business operates on someone else’s property, then a commercial umbrella insurance policy is a good idea. This includes things like home remodeling and painting businesses that need protection against accidental damage to a client’s home.
At the same time, a small business that works in an industry where employees have increased risk exposure for being injured on the job also needs a commercial umbrella insurance policy. This typically helps augment the coverage provided by general liability and worker’s compensation insurance.
Essentially, commercial umbrella liability coverage serves to increase the potential coverage of several policies all at a very reasonable cost. It is certainly much more affordable than paying to increase the individual policy’s liability coverage to the same threshold.
Umbrella liability insurance can also be helpful if you need to increase the limits of your coverage to fulfill a contract requirement. There are many contracts where the underwriters will not sign off on the financing without certain coverage limits in place. In these instances, an umbrella liability insurance policy is a more affordable way to meet these requirements compared to increasing the coverage limits within an existing liability policy.
How Much Umbrella Liability Coverage Does My Business Need?
Other than contracts where higher coverage limits are required by the underwriters, it can be hard to know just how much umbrella liability coverage your business needs. A variety of things come into play when considering whether or not umbrella liability is worth the investment this include some of the following factors: