General liability vs. umbrella liability insurance
What is the difference between commercial umbrella insurance and general liability insurance?
General liability insurance is a standalone policy that covers many third-party risks, while commercial umbrella insurance provides extra coverage limits to your existing liability policies, including general liability.
You can purchase both policies together to protect against common lawsuits beyond the standard general liability policy limits. You can also purchase just general liability insurance. However, you cannot purchase umbrella insurance by itself.
Here's a closer look at each type of insurance product:
What is general liability insurance?
- Third-party property damage, such as a computer repair technician accidentally dropping a customer's laptop and breaking it.
- Third-party bodily injury, such as a customer falling in a coffee shop and spraining their arm.
- Personal injuries and advertising injuries, such as libel, slander, and copyright infringement. For example, a medical spa gets sued by a competitor that claims the spa appropriated their copyrighted logo.
Many general liability insurance policies also include product liability, which can protect your business if a customer sues, claiming they were harmed or incurred medical expenses resulting from your company's product.
What is umbrella liability insurance?
Commercial umbrella liability insurance provides additional coverage for many liability insurance policies. It will raise the policy limits for whichever underlying liability policy is exhausted by a claim, including:
- General liability insurance, from which umbrella insurance provides additional coverage for common business risks, including slip-and-fall injuries and customer property damage, that can quickly deplete your underlying general liability limits.
- Commercial auto insurance can be extended by an umbrella policy if your business-owned vehicle gets in an accident, which will increase your auto coverage to help pay legal defense costs, medical bills, and property damage.
- Hired and non-owned auto (HNOA) insurance coverage can be increased when a personal, leased, or rented vehicle used by your business gets in an accident. Umbrella liability coverage will extend your HNOA coverage to help pay for expensive claims.
- Employer's liability insurance can be extended by an umbrella policy when an employee sues over a work injury or illness. Umbrella insurance increases your policy limits to cover legal costs that exceed your underlying employer's liability coverage, which is often included in a workers' compensation insurance policy.
Excess liability insurance is another policy option that can extend your coverage limits, but it only applies to one underlying policy, while umbrella insurance can be applied to multiple policies.
Do you need both umbrella insurance and general liability insurance?
General liability insurance protects against common third-party risks. Umbrella insurance extends the coverage limits of several important policies.
Whether you need both policies will depend on your business needs. General liability is one of the most frequently purchased small business insurance policies against so many common liabilities.
Businesses in higher-risk industries may need extended coverage limits. Some companies may also need an umbrella policy to bid on certain projects or to sign a contract.
While you can purchase general liability insurance as a standalone policy, umbrella cannot and requires an active primary policy to be purchased. So you can have both general liability and umbrella insurance, or just general liability, but you can't just have umbrella insurance.
Speak to a licensed insurance agent if you have further questions about whether you need both policies to protect your business.
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MALE VOICEOVER: If you own a small business, one lawsuit could cost more than you expected. That’s why many business owners carry general liability insurance—and sometimes umbrella insurance.
But what’s the difference?
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General liability insurance is one of the most common policies for small businesses. It protects you from third-party claims, such as customer injuries or property damage, and advertising-related lawsuits.
It helps pay medical bills, legal defense costs, and settlements when someone outside your business claims you harmed them.
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For many small businesses, this is the first policy they buy because it covers some of the most common risks.
Umbrella insurance works differently. Instead of covering new risks, it extends the coverage limits on other liability policies, like general liability, commercial auto, and employer’s liability, which is typically included in workers’ compensation.
If a lawsuit costs more than your standard policy limit, the umbrella policy can step in and cover the remaining costs.
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For example, if your general liability policy covers $2 million dollars, but a lawsuit totals $2 and a half million dollars, an umbrella policy could cover the remaining $500,000 dollars.
Most businesses start with general liability insurance, but you might add umbrella coverage if your industry has higher risks, your business has lots of customer traffic, or your contracts require higher liability limits.
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It’s good to remember that umbrella insurance cannot be purchased on its own. You need to have an underlying policy first.
The right coverage depends on your business and your level of risk. With Insureon you can get quotes in minutes and find the right policies for your business.
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Tap the link to get small business insurance you can count on.
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Protect your business with the right insurance policies with Insureon
With Insureon's easy online application, you can get free quotes from the leading U.S. insurance companies.
Our licensed insurance agents can answer any questions you may have about the different types of insurance available.
Insureon can help you get started with a general liability policy and umbrella coverage, as well as other additional coverage options, such as commercial property and professional liability insurance.
Once you pick the right policies for your business, you can start coverage and obtain a certificate of insurance (COI), often within 24 hours.
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