Do I Need a Commercial Umbrella Insurance Policy?
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Who Needs a Commercial Umbrella Policy?

Here’s the short answer: maybe. Maybe Commercial Umbrella Insurance would be a great addition to your business protection plan. But some businesses find that they do fine without it.

While it’s impossible to determine your business needs without knowing how it operates, there are a few general rules that can help pinpoint who may benefit from a Commercial Umbrella policy.

Do You Have Considerable Third-Party Liabilities?

As you may know, Commercial Umbrella Insurance can only be applied to certain liability insurance policies, so think about your risk of facing third-party lawsuits. These are expensive ordeals, and multiple occurrences – or even a single, massive suit – can quite easily drain an insurance policy's coverage.

So if you've been sued in the past and worry it will happen again, maybe a Commercial Umbrella policy is a worthy investment. Similarly, think about the dangers or liabilities you deal with every day and how likely they are to result in an accident or lawsuit.

To help get your wheels turning, ask yourself these questions:

  • Is your commercial property open to the public? When third parties regularly visit your business, the chance of accidents and premises liability lawsuits increases.
  • Do your employees use their cars for business? If an employee gets into an auto accident while driving for work purposes, you could be liable for their damages.
  • Is there a high risk of occupational injury for your employees? Though Workers’ Compensation Insurance should cover most work injury expenses, an employee could potentially sue you, alleging your negligence contributed to their injury.

If you answer yes to any of these, you may want to consider getting a Commercial Umbrella policy to bolster your protection.

Do Your Clients or Partners Have High Coverage Requirements?

Consider the nature of your work contracts. In some instances, clients may require you to have coverage limits that exceed those of your existing policy.

For example, your General Liability policy might offer a $1 million per occurrence limit, but a client may require you to carry $2 million in coverage. To get the required coverage and land the job, you could purchase a Commercial Umbrella policy (which conveniently offers coverage in $1 million increments). Now you meet the insurance requirement and the client feels secure working with you.

Wealthy clients, complex projects, and other jobs involving big potential losses will likely require higher amounts of coverage. Commercial Umbrella Insurance could be just the solution you’re looking for.

Do You Want More Coverage without Breaking the Bank?

Commercial Umbrella Insurance can be an effective way to increase multiple policy limits relatively inexpensively. So if that's what you're after, this policy might be the solution.

You could raise the limits of your General Liability Insurance, Hired and Non-Owned Auto Liability Insurance, and Employer’s Liability Insurance one at a time, but that might be a hassle and result in higher premiums. With a Commercial Umbrella policy, you may be able to save money, get millions more in supplemental coverage, and apply coverage to all three underlying policies if you need to.

Check out our guide "How Much Does Business Umbrella Insurance Cost?" to get a better idea of what you might pay for a Commercial Umbrella policy.

All Things Considered…

Commercial Umbrella Insurance can be an effective way to increase multiple policy limits relatively inexpensively. So if that's what you're after, this policy might be the solution.

If you feel like Commercial Umbrella Insurance is a good choice for your business, talk to your agent about it. Your agent can assess your risk exposures and help you decide whether the coverage is a safe bet or safety overkill.

Umbrella Liability Insurance: Further Reading