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Commercial Umbrella Insurance
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What is commercial umbrella insurance?
- Commercial umbrella insurance
Once a policy’s limit is reached, commercial umbrella insurance provides additional coverage for liability claims made on general liability, commercial auto, or employer’s liability insurance.
When do small businesses need umbrella coverage?
Commercial umbrella insurance boosts the coverage limits of an existing liability policy.
Business owners who purchase commercial umbrella insurance usually need it to fulfill a contract that requests higher than standard policy limits. For example, if a client contract required a general liability policy with a $5 million limit, an umbrella policy of $3 million would be added to your existing $2 million general liability policy.
If a lawsuit ends up costing more than your business insurance policy limit, umbrella insurance frees up additional funds so you don’t have to pay defense costs out of pocket. It boosts coverage on several of your liability policies, not just general liability.
Businesses that need this policy:
- Are required to carry a high liability policy limit to work with a certain client
- Have high liability risks, such as a business location with a lot of foot traffic
- Need more liability protection across several policies
Commercial umbrella insurance can supplement the liability coverage of:
- General liability insurance
- Employer's liability insurance (often included in workers' compensation)
- Hired and non-owned auto insurance
Before you can purchase umbrella liability insurance for any of these policies, an insurer will require you to carry at least $1 million in coverage on the underlying policy.
Umbrella liability insurance cannot be added to professional liability insurance that covers lawsuits over professional mistakes, including undelivered services and missed deadlines.
How can a commercial umbrella insurance policy help my business?
| Small business | Freelancer | Home business | |
|---|---|---|---|
| General liability insurance | You have a busy storefront and want to protect against the high cost of a customer injury lawsuit. | Before you can work with expensive equipment, the client asks you to increase your policy limit in case you damage it. | A corporation sues over copyright infringement and the damages end up costing more than your policy limit. |
| Commercial auto insurance | Your business operates a fleet of vehicles and the cost of several minor accidents could exceed your underlying policy limit. | You get into an accident on your way to visit a client and the property damage exceeds your regular policy limit. | Your business vehicle gets into an accident; someone is injured and the medical bills exceed your policy limit. |
How does commercial umbrella insurance benefit employers?
Businesses that involve hazardous work, such as construction, may need extra protection against employee injury lawsuits. Umbrella insurance added to employer's liability insurance guards against employee claims that your negligence led to an injury.
How much does commercial umbrella insurance cost?
This policy costs about $40 per month for each $1 million of additional coverage. Several factors affect commercial umbrella insurance costs, including:
- Industry and risk
- Coverage limits
- Location
- Number of employees
- Number of vehicles