Commercial Umbrella Insurance
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What does commercial umbrella insurance cover?

Commercial umbrella insurance can increase the limit of three policies: general liability insurance, employer's liability insurance, and commercial auto liability insurance. It protects against the most expensive liability lawsuits.

Commercial umbrella insurance can provide additional coverage for:

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Third-party bodily injury
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Third-party property damage
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Employee injury
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Auto accidents

Third-party bodily injury

When you add commercial umbrella (excess liability) insurance to your general liability insurance, it can cover medical or legal expenses if someone injures themselves on your business’s property.

Example: A customer trips on an uneven step at your restaurant and sustains serious injuries that leave him with a chronic health problem. To recoup the cost of medical expenses, he decides to sue for $2 million in damages. Umbrella liability insurance would cover damages beyond the initial $1 million covered by general liability insurance, up to the umbrella policy's limits.

Third-party property damage

When you add commercial umbrella insurance to a general liability policy, it helps repair or replace damaged customer property.

Example: A general contractor backs a company van into a client’s warehouse, destroying inventory and causing millions of dollars in damages. In this situation, an umbrella liability policy can cover the expenses up to your policy limit associated with making repairs and replacing the client’s inventory.

Employee injuries

When you add umbrella liability insurance to employer's liability insurance (typically included in workers' compensation), it helps guard against employee lawsuits over work injuries.

Example: A long-time employee at an HVAC installation company sues her employer over a chronic back injury from lifting heavy equipment. In this situation, an umbrella liability policy can cover the cost of hiring a lawyer along with the resulting settlement or court-ordered judgment.

Auto accidents

When you add umbrella liability insurance to a commercial auto insurance policy, it helps cover costs if someone sues for damages caused by your vehicle.

Example: On the way to a job site, a window installer driving a company van causes a pile-up. The other drivers sue for compensation that totals more than a million dollars. In this situation, an umbrella liability policy can cover your legal defense costs. It would also cover damages paid to other drivers in the form of a settlement or court-ordered judgment.

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Commercial umbrella insurance does not cover:

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Damages within the underlying policy limits
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Professional errors
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Employee discrimination lawsuits
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Business property damage

Damages within the underlying policy limits

Umbrella liability insurance does not become active until the underlying policy has reached its limits. And as with any policy, it does not provide coverage beyond its own policy limits. Learn more about how umbrella insurance works.

Example: An IT consultant accidentally drops a client's laptop; the hard drive breaks and vital information is lost. The client sues for $1 million in damages. The consultant's general liability policy has a limit of $1 million, so it pays for the claim. The umbrella insurance would only become active for damages beyond $1 million, up to its policy limit of $4 million.

Professional errors

Professional liability insurance, also called errors and omissions insurance or malpractice insurance, can cover lawsuits over professional mistakes, including undelivered services and missed deadlines. Umbrella liability insurance cannot be added to this policy.

Example: An architect misses a deadline for creating a blueprint. Because of this, the client delays plans for construction, which is a tremendous financial setback for the company. The client decides to sue the architect for the revenue lost because the business will open later than anticipated.

Employee discrimination lawsuits

Employment practices liability insurance (EPLI) can cover lawsuit expenses related to claims of harassment, discrimination, and wrongful termination. Umbrella insurance cannot be added to this policy.

Example: A real estate agent files a lawsuit claiming that her agency assigns the most valuable properties to male agents. An EPLI policy could cover legal expenses for the real estate agency.

Business property damage

The commercial property insurance portion of a business owner's policy can help pay for expenses to repair or replace your business property when it's damaged by fire, theft, and some weather-related events. Umbrella insurance can only be added to liability policies, not property insurance.

Example: A thief breaks into a medical office and steals laptops and other electronic equipment. Commercial property insurance can help pay to replace the stolen items and repair the broken window.

Umbrella insurance covers risks other policies ignore

Umbrella liability insurance sometimes covers risks that your liability policy excludes. For example, most general liability insurance policies don’t include liquor liability insurance, but an umbrella policy might. Talk to an Insureon agent to find out which type of umbrella insurance best fits your business.

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