Commercial umbrella insurance for real estate businesses and rental properties
Commercial umbrella insurance provides additional coverage for real estate businesses and professionals once a policy's liability limits have been reached. It extends protection for covered claims under general liability, commercial auto, and employer’s liability insurance, helping safeguard your business from large, unexpected losses.
Umbrella insurance boosts your liability coverage limits
The costs of a lawsuit against your real estate business can quickly add up—even to the point where your insurance coverage isn’t enough to cover it. Commercial umbrella insurance, similar to excess liability insurance, can pay for claims that exceed the limit on your liability policy.
An umbrella insurance policy can boost the coverage limits of your:
- General liability insurance
- Commercial auto insurance (required in almost every state)
- Employer’s liability insurance (part of workers' compensation insurance)
Most real estate businesses purchase umbrella insurance to satisfy client contracts that require policy limits higher than $2 million.
How does umbrella insurance work for real estate businesses and rental property owners?
Umbrella insurance activates when the limits are exhausted on the underlying policy.
For example, say your employee fails to use a wet floor sign after mopping the office floor. Your client slips and falls, suffering a serious head injury that leaves them unable to work for months. The client sues you for $2.5 million in damages.
If your real estate business has general liability insurance with a $2 million per-occurrence limit, that policy would cover the first $2 million. Then your umbrella policy would kick in as supplemental insurance and cover the remaining $500,000.
Do I need real estate umbrella insurance if I own rental properties?
While commercial umbrella insurance isn't typically required by law for rental property owners, it's often strongly recommended due to the potential cost of liability claims.
Rental property owners can face significant personal liability risks, including:
- Tenant injuries
- Visitor accidents
- Property-related lawsuits
- Claims involving employees or contractors
In some cases, lenders, investors, property management companies, or other contractual agreements, may require higher limits than those provided by a standard policy. Umbrella insurance coverage can help rental owners meet these requirements and provide an additional layer of protection against large claims.
Even when not required, many real estate investors choose umbrella liability insurance to help protect their personal assets and future income from unexpected lawsuits and landlord liability expenses.
What type of coverage can commercial umbrella insurance provide for real estate professionals?
A commercial umbrella liability policy usually mirrors the coverage of the underlying policies, which may include:
General liability coverage
Umbrella insurance/excess liability insurance provides coverage after you reach the limit of your general liability policy. It can help cover legal costs and medical bills related to:
- Customer bodily injuries, such as from a slip-and-fall accident
- Client property damage
- Personal injuries and advertising injuries, such as invasion of privacy and copyright infringement
- Defamation of character, including libel and slander
Umbrella coverage will also cover claims on the general liability portion of a business owner’s policy (BOP), which bundles general liability insurance with commercial property insurance for less than purchasing the policies separately.
Commercial auto insurance
The cost of a car accident involving multiple vehicles can go sky high if the other drivers sue for damages. Having auto liability insurance is a must in order to protect yourself financially.
Real estate umbrella insurance covers liability claims that exhaust the limits on your commercial auto policy. It also extends coverage on hired and non-owned auto (HNOA) insurance for real estate professionals and their employees who drive their own vehicles for work purposes.
If you or one of your employees gets into an auto accident, it can cover legal bills related to:
- Injuries caused to others
- Damage to another person’s vehicle
- Other third-party property damage
Employer's liability insurance
Being in real estate can involve physical work, which is why umbrella insurance is a recommended policy for professions like commercial landlords, real estate appraisers, and real estate agents. If one of your employees blames an injury on the lack of proper equipment or other negligence, they could sue.
If an employee lawsuit over an injury escalates and exceeds the limits on your employer’s liability insurance policy, then your umbrella policy kicks in to cover the remaining defense costs. It adds an extra layer of protection to your existing coverage.
Top real estate professionals we insure
How much does real estate commercial umbrella insurance cost?
Most real estate businesses pay an average of $100 per month for commercial umbrella insurance, but you could pay more or less depending on your risks.
Average costs for underlying policies for real estate professionals include:
- General liability: $44 per month
- Commercial auto: $192 per month
- Workers' comp: $51 per month
Insurers will look at several different factors during underwriting to calculate your cost, such as the underlying policies, coverage limits, and more.
What factors impact the cost of an umbrella policy for landlords and other real estate businesses?
Several factors can affect the cost of your real estate umbrella insurance premium, such as:
- Real estate services offered: Property management companies, real estate brokerages, and businesses that oversee multiple properties may face more liability exposures than landlords with a small number of rental units, and will generally pay more for insurance.
- Industry risks: Insurers often consider the risks associated with your specific operations. Frequent property showings, tenant interactions, maintenance activities, and the use of company vehicles can increase the likelihood of liability claims.
- Annual revenue: Businesses with higher revenue often have greater exposure to lawsuits and may need higher levels of protection, which can affect insurance costs.
- Location: Where your business and properties are located can impact premiums. Factors such as local litigation trends, population density, traffic patterns, and regional claim costs may influence your rate.
- Number of employees: Businesses with more employees typically have a greater chance of liability claims involving workplace incidents, employee actions, or management decisions.
- Employee turnover rate: Frequent hiring and turnover can increase administrative and employment-related risks, which may affect an insurer's assessment of your business.
- Policy limits and deductible: Higher coverage limits generally result in higher premiums. The deductible associated with your underlying policies may also affect the overall cost of coverage.
- Claims history: A history of filing claims can increase insurance costs, while businesses with few or no claims may qualify for more favorable rates.
What does umbrella insurance not cover for real estate businesses?
Commercial umbrella insurance can provide valuable financial protection against large liability claims, but it doesn't cover every type of risk a commercial real estate business may face.
Home inspectors, mortgage brokers, and other professionals in the real estate industry may need additional policies to protect against other common exposures.
For example, umbrella insurance won't cover:
- Professional liability lawsuits
- Property insurance claims
- Employee discrimination lawsuits
- Expenses covered within underlying policy limits
Other important insurance policies for real estate businesses and rental property owners
In addition to commercial umbrella insurance and its underlying policies, real estate professionals and rental property owners should also consider:
Cyber insurance: This policy helps real estate businesses survive data breaches and cyberattacks. It can help cover client notification expenses, fraud monitoring services, and other associated costs.
Errors and omissions insurance: Also called professional liability insurance or E&O, this policy can cover legal defense costs (including attorney fees) of lawsuits related to a real estate professional's business decisions.
Lessor's risk only (LRO) insurance: This policy protects commercial landlords from tenant lawsuits over property damage and injuries.
Surety bonds: Real estate professionals sometimes need a surety bond to get licensed in their state. It acts as a financial guarantee they'll comply with contract terms and regulations.
Get free umbrella insurance quotes and buy online with Insureon
Are you ready to safeguard your real estate business and extend your liability protection with umbrella liability insurance?
Simply complete Insureon’s easy online application today. We partner with top-rated U.S. insurance companies to get you the best business liability insurance. You can also consult with an insurance agent on the types of business insurance you need, and how to get affordable insurance coverage within your budget.
Once you find a policy that fits your needs, you can begin coverage and access your certificate of insurance (COI) in less than 24 hours.
What our customers are saying
The average costs on this page were derived from our data on small business owners in the real estate field who purchased policies through Insureon. Most of our customers have less than five employees, annual revenue ranging from around $50,000 to more than $200,000, and five years or less in business.
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