How much does commercial umbrella insurance cost?

Commercial umbrella insurance boosts liability coverage when you reach the maximum policy limit on your underlying general liability insurance, commercial auto insurance, or employer's liability insurance. Most small businesses purchase this policy as a way to meet a client's demands for limits in excess of $2 million.

For Insureon customers, the median premium for umbrella insurance is $75 per month, or $900 annually. The median offers a more accurate estimate of what your business is likely to pay than the average cost of umbrella insurance because it excludes outlier high and low premiums.

Many small businesses (17%) pay less than $500 per year for umbrella insurance and 36% pay between $500 and $1,000 per year.

The cost of umbrella insurance varies based on how much coverage you buy. Businesses in industries that are especially vulnerable to certain liabilities may need higher policy limits than those with limited liability.

In general, businesses in high-risk industries tend to buy more umbrella coverage than low-risk ones. For example, building design professionals pay a median of $1,600 annually for umbrella coverage, whereas personal care professionals pay a median premium of $480 annually (only $40 per month). The graph below illustrates how the type of business affects what you'll pay for a commercial umbrella insurance policy.

• Your business is open to the public and experiences lots of foot traffic, which increases the chance of a claim on your general liability policy.
• You regularly handle customer property, which places you at risk of a property damage lawsuit.
• You own a fleet of heavily used commercial vehicles, which increases the chance of an auto liability claim.
• Your industry includes risky work that places your employees at risk of bodily injury, and you at risk of employer’s liability lawsuits.

Commercial umbrella insurance increases the coverage limits of your underlying insurance policies in $1 million increments. Small businesses usually purchase umbrella insurance to fulfill contracts calling for limits that are above $2 million.

It's fairly common for a client's contract to call for a $5 million limit on a policy. In that case, an umbrella policy with a limit of $3 million would be added to a liability policy with a $2 million limit to reach the total requested amount.

The cost of umbrella insurance tends to increase with the amount of insurance coverage. In short, you'll pay more for higher liability limits.

Generally, it costs about $40 per month for each additional $1 million of coverage you buy. For example, raising the limits on your general liability insurance from $2 million to $5 million might cost an additional $120 per month over the cost of the underlying policy.

Commercial umbrella insurance boosts your limits across several liability policies. If you only need coverage added to one policy, then you could purchase excess liability insurance.

To select the most cost-effective policy for your business, take stock of the potential liabilities you face and see if extra coverage is worth the increased cost.

Commercial umbrella insurance quotes will vary based on several factors. These tips can help keep costs down:

Pay your entire premium upfront. You can typically pay your premium in monthly or annual installments. It might be tempting to go with a smaller monthly payment, but consider paying the full premium instead. Many insurers offer discounts on annual premiums.

Proactively manage your risks. Umbrella insurance covers your liability risks across several policies, and fewer claims means lower insurance rates. Business owners can create a comprehensive risk management plan to avoid claims. For example, you might:

• Develop a thorough training program for employees
• Invest in a security system
• Compile rules for posting to social media
• Create procedure checklists and reviews
• Minimize hazards on your business premises
• Limit who can drive business vehicles to avoid claims on your auto policy

Insurance premiums vary based on the policies a business buys. See our small business insurance cost overview or explore costs for a specific policy.

• General liability insurance
• Professional liability insurance
• Business owner’s policy
• Errors and omissions insurance
• Workers' compensation insurance
• Cyber liability insurance
• Commercial auto insurance
• Employment practices liability insurance
• Directors and officers insurance