Umbrella Liability Insurance
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Commercial Umbrella Liability Insurance

Commercial Umbrella Insurance offers extra liability coverage for the most expensive lawsuits. For example, if a covered lawsuit maxes out your General Liability Insurance policy but you still owe money for damages, Commercial Umbrella coverage can provide additional funds to make up the difference.

Specifically, Umbrella Liability Insurance can supplement the coverage offered by:

An insurer might also require you to carry the minimum policy limits on these small business insurance policies before offering you Commercial Umbrella Insurance. For example, you may need a General Liability Insurance policy with a $1 million or $2 million limit before you can buy Umbrella Liability Insurance.

Note: an Umbrella policy cannot supplement the coverage of your Professional Liability Insurance.

How Does Commercial Umbrella Insurance Work?

Think of Commercial Umbrella Insurance as a safety net for your safety net. Your other liability policies are your first line of defense. But when you need more protection, your business umbrella insurance can pick up the slack.

Here's how it works.

Say you have a General Liability Insurance policy with a $1 million limit, which means it can pay up to $1 million toward your legal expenses.

Now let's say someone trips and falls at your business. It's a drawn-out legal battle, and between lawyers' bills and damages, you owe $1.5 million. That means that, after hitting your General Liability policy limit, you still have a $500,000 bill. What happens then?

This is where Commercial Umbrella Insurance can help. It can pay for expenses that exceed your underlying policy's limit. So for the case above, a Commercial Umbrella Liability policy can cover the additional $500,000.

Basically, you can make a claim on a Commercial Umbrella Insurance policy when…

  • Your business is sued over customer injuries, customer property damage, or employee injuries not covered by a Workers' Comp policy; and
  • The cost of the lawsuit is more than the limit of the underlying insurance policy designed to cover it.

What Does Commercial Umbrella Insurance Cover?

If you have any (or all) of these three qualifying policies – General Liability Insurance, Employer's Liability Insurance, or Commercial Auto Liability Insurance – a commercial umbrella can boost your coverage.

Umbrella Insurance CAN increase coverage for:

  • Slip-and-fall injuries.
  • Car accident liability.
  • Workers' Comp lawsuits.
  • Lawsuits over third-party property damage.

Commercial Umbrella Insurance CANNOT cover…

  • Malpractice lawsuits.
  • Professional liability lawsuits.
  • Employee discrimination lawsuits.
  • Property damage.

Some commercial umbrellas can also cover risks the underlying liability policy excludes. For example, most General Liability Insurance policies don’t include Liquor Liability Insurance, but a Commercial Umbrella policy might.

How Much Does Umbrella Liability Insurance Cost?

Commercial Umbrella Insurance can be a cost-effective way to add an extra layer of protection to your business. It's usually purchased in $1 million increments. Insureon customers pay an average of $1,533 for the coverage, but the median cost is lower – about $960.

Those prices represent a wide range of businesses in different industries. Your Umbrella Insurance premium may vary depending on the size, location, and risks of your business.

To learn more, check out our Commercial Umbrella Insurance cost page.

Who Needs a Commercial Umbrella Policy?

Commercial Umbrella Insurance used to be a policy that only big businesses bought. These days, more small businesses invest in commercial umbrellas. You might consider it if…

  • You need more protection and are on a budget. Increasing the limits of your General Liability policy often costs more than getting a commercial umbrella.
  • You want to sign a big client who requires more liability insurance. A commercial umbrella policy can often satisfy their requirements.
  • You have lots of contact with the public. The more foot traffic a business has, the greater its liability risks are.
  • You worry about the exclusions in your other liability policies. Some Umbrella Insurance covers claims that other small business liability policies exclude.

3 Key Takeaways about Commercial Umbrella Insurance

As your compare Umbrella Insurance quotes and begin considering your options, keep these three things in mind.

  1. You can't buy Umbrella Insurance without having at least one other policy. You need to have General Liability, Employer's Liability, or Commercial Auto before you can get Umbrella coverage. To put it simply, you need to have the entree before you can supersize it.
  2. Umbrella Insurance doesn't work with Professional Liability Insurance. While it does boost three other policies, Umbrella Insurance can't help out with professional liability claims.
  3. Umbrella Insurance comes in $1 million increments. Small-business owners can increase their lawsuit protection in $1 million increments through Commercial Umbrella Insurance.

Commercial Umbrella Insurance: Further Reading

Commercial Umbrella Insurance in the Insureon Blog