“April showers bring May flowers”, but rainy days can happen any time. When you purchase business insurance, you’ve planned ahead to weather storms, but questions may still linger: “Am I covered enough?” or “What if something happens and my plan doesn’t cover all damages?”. You can make a good guess about the best coverage to meet your business needs, but there is no exact science to it. No need to fret, Commercial Umbrella Insurance can help alleviate your concerns!
What Is Commercial Umbrella Insurance?
Commercial Umbrella Insurance provides additional coverage for costs that exceed your liability policy limits. This can include legal defense costs, judgements and settlements, medical bills, property damage or bodily injury. Without this type of coverage, your business would be responsible for any of these costs that are more than your liability policy limits.
For example, one of your employees gets into an accident in a company vehicle and they are at fault. The total damages are $250,000, but your Commercial Auto policy has a liability limit of only $100,000. Your business would be responsible for paying the remaining $150,000 balance, out of pocket (Talk about when it rains, it pours)! An Umbrella Policy would pick up where the Commercial Auto Policy left off by covering the additional $150,000.
How Does Umbrella Insurance Work?
Think about the umbrella you use to protect yourself from the rain. It covers whatever is beneath it- you, your hair, your personal possessions etc., but you (hopefully) aren’t going into the rain in the nude. Your primary coverage in the outdoors is your clothing, shoes and maybe even a jacket. A Commercial Umbrella Policy works similarly, it extends the coverage that is beneath it. The coverage beneath this policy is your primary liability policy. This could include a general liability, professional liability, or commercial auto insurance policy. But you must first have an underlying policy prior to purchasing an Umbrella Policy, which can also be extended over one or more underlying policies.
An additional benefit of a Commercial Umbrella Policy is that it offers liability coverage for exposures that are not covered by the underlying policy. In general, coverage that may have been excluded or limited in the underlying policy may now be available with the Umbrella Policy.
An Umbrella Policy is purchased at an aggregate limit and can be as low as $1,000,000 and as high as several million dollars depending on your business, the carrier, and the underlying coverage. The limit that is purchased is the amount up to which your policy will cover a claim. Essentially, purchasing an Umbrella Policy greatly increases the coverage of the underlying liability policy. For example, your General Liability policy of $1,000,000 per occurrence, with an Umbrella Policy of $3,000,000, now gives you up to $4,000,000 in General Liability coverage per occurrence plus additional coverages. Umbrella policies are typically less expensive than the underlying policy since they aren’t used until after the underlying policy is exhausted.
Should You Get an Umbrella Policy?
That all depends on your business, its exposure to risks, and your risk tolerance. Sitting down with an experienced insurance professional to discuss Umbrella Coverage can help you explore your options and make the best decision for your business. Contact Us today to start the conversation!