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 $4 million would be added to your existing $1 million commercial general liability.
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. An umbrella policy is often a cheaper option than increasing the limits on your commercial liability insurance.
Businesses that need this policy:
- Need more liability protection and are on a budget
- 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
- Want to cover exclusions in their existing liability policies
Commercial umbrella insurance can supplement the liability coverage of:
- General liability insurance
- Employer's liability insurance (often included in workers' compensation)
- Commercial 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?
How does commercial umbrella insurance benefit employers?
Commercial umbrella insurance costs
Commercial umbrella insurance can cost less than increasing the limits of the underlying policy. Several factors affect policy costs, including:
- Industry and risk
- Coverage limits
- Location
- Number of employees
- Number of vehicles