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.
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.
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.
|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.|