Insureon Blog

How Can Umbrella Insurance Help a Small Business?

3. June 2015 07:40


Word has it that only the rich and famous benefit from Umbrella Liability Insurance. While it's true that the upper crust may have more assets to protect, that doesn't mean Umbrella Insurance is a luxury only a few need or can afford.

Here's a little known fact about Umbrella Insurance: for small-business owners, it can be a cost-saving tool. But before we get into that, let's establish what this policy can and can't do for you.

Under My Umbrella (Insurance)

Umbrella Liability Insurance is a unicorn among insurance policies. While it's a standalone policy, its primary function is to supplement underlying coverages (General Liability Insurance, Hired and Non-Owned Auto Liability Insurance, and Employer's Liability Insurance). That means two things:

  1. It offers an extra buffer of financial protection.
  2. You can't just draw on your Umbrella policy outright.

In other words, your underlying policy has to reach its limit before you can apply your Umbrella coverage toward the remaining cost of the claim. For example, say your business is facing an advertising injury lawsuit, a claim your General Liability policy can address. However, between the judgment and legal defense fees, you owe $1.5 million – that's $500k more than your GL policy limit can account for. If you have Umbrella Insurance, it can cover that staggering leftover amount so it doesn't come out of your pocket (or run you out of business).

An Umbrella policy can be a lifesaver when a disaster exceeds your initial planning.

Umbrella Insurance: Enough to Make You Sing in the Rain

Here are some other interesting things to know about Umbrella Insurance:

Umbrella Insurance is truly a versatile and convenient policy, but even the most useful policies have their limitations. In this case, Umbrella Insurance can't be applied to Errors & Omissions Insurance, Employment Practices Liability Insurance, D&O Insurance, Cyber Liability Insurance, or Commercial Property Insurance. For ideas on how to save money on these policies, talk to an insureon agent.


General Liability Insurance | Insurance Savings Tips | Insurance Terms Explained | Small Business Risk Management | Workers' Compensation Insurance

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