Umbrella insurance is defined as a form of insurance that provides extra protection against lawsuits filed against you for alleged property damage or personal injuries.
How umbrella insurance protects your business
Think of an umbrella insurance policy as insurance for your insurance. When a large lawsuit exhausts your liability insurance’s coverage limits, an umbrella policy will cover the difference.
How does umbrella insurance work? When legal costs consume your available coverage, your umbrella policy provides additional funds up to the limit stated in the policy.
For example, umbrella coverage boosts your insurance safety net for situations such as:
- A customer slipping and falling while on your property
- An accident with a business vehicle that causes third-party injuries or property damage
- You or an employee damaging a customer’s property while working at his facility
However, umbrella insurance does not cover the following types of claims:
- Malpractice
- Professional liability (or errors and omissions)
- Employee discrimination
- Damage to your own property
Eligibility requirements
To qualify for umbrella insurance, you need to already own one or more of the following types of small business insurance:
- General liability insurance
- Employer’s liability insurance (often part of workers’ compensation insurance)
- Commercial auto insurance
You also have to purchase a minimum amount of the base coverage to get umbrella insurance. For example, an insurance company might require your general liability insurance to have no less than $1 million in coverage before you can buy an umbrella plan.
Who needs umbrella insurance?
Small businesses that have a significant need for liability protection, but a limited budget, can benefit from buying umbrella insurance.
Companies in the following segments will likely have a strong need for this type of protection:
However, some companies need umbrella insurance more than others. This includes firms that:
- Often have customers or visitors who work in their facilities
- Frequently work with customers on risky equipment
- Commonly do projects at customer job sites
- Rent large commercial spaces from a landlord
Compare free quotes for umbrella insurance
Insureon helps small business owners compare commercial insurance quotes from A-rated U.S. carriers with one easy online application. Start an application today to protect your business against large liability claims.