Your business is always vulnerable to lawsuits from a variety of sources, which is why you have different insurance policies to protect you from liability. Unfortunately, there are gaps in most types of business insurance that can leave you with inadequate protection under certain circumstances.
In business insurance policies, a commercial umbrella policy is used to supplement your existing policies to be sure you’re completely protected. Commercial umbrella insurance goes into effect when the damages of a lawsuit exceed the limit of your liability insurance.
For example, if your business faces a lawsuit that exceeds the limit of your existing insurance policy, you’ll have to pay out the difference between your limit and the cost of the lawsuit. In many cases, this can be a considerable difference, which is why business owners opt for umbrella insurance to cover the difference.
There are other things to consider about commercial umbrella insurance.
Commercial Umbrella Insurance Only Supplements Specific Policies
To get all you can from your insurance policy, it’s important to understand what it does and doesn’t cover. Commercial umbrella insurance is only supplemental coverage added to these types of insurance:
- General liability insurance: This is a type of business liability insurance that can protect you from a variety of claims, including bodily injury, property damage, personal injury and more.
- Hired and non-owned auto liability insurance: This type of business insurance protects you from damage caused by the vehicles your business uses but doesn’t own, such as leased vehicles, rentals and employee-owned cars for company errands. This is often used as gap coverage for commercial auto insurance.
- Employer’s liability insurance: This is also known as workers’ compensation insurance and covers employee injury, medical bills, recovery costs and missed wages, as well as final expenses if the employee dies.
If you reach your limit on one or more of these insurance policies, your commercial umbrella insurance will cover some or all of the additional funds needed for the claim. For example, if you’ve reached the limit of your general liability insurance, but you have another insurance claim, commercial umbrella insurance may cover it. If a work injury lawsuit is exceeding the standard workers’ compensation policy, commercial umbrella insurance could help.
It’s important to remember that commercial umbrella policies don’t supplement your errors and omissions insurance, which is a type of insurance that covers professional mistakes or things you may have overlooked. It also doesn’t supplement other commercial policies not covered here.
In addition, it’s important to realize that commercial umbrella policies only apply to claims if you have the appropriate underlying policy and your other limits have been reached. In addition, you may not be able to purchase a commercial umbrella policy if your underlying policy has a certain limit.
What Does Commercial Umbrella Insurance Cost?
Commercial umbrella insurance is incredibly helpful for your business and a less expensive way to supplement your coverage. Rather than increasing your underlying limits individually, which raises your premiums, commercial umbrella insurance policies give you plenty of coverage for relatively low premiums.
This additional coverage is also more versatile than increasing the limits on other policies, since it can supplement other policies.
How Much Commercial Umbrella Insurance Do I Need?
The amount and cost of your commercial umbrella policy may vary, so it’s advised to speak with your insurance agent to decide what’s appropriate for your business.
There are a few considerations that can give you an idea of how much commercial umbrella insurance may be appropriate for you, such as:
- Commercial umbrella insurance comes in $1 million increments. Because of this, you automatically need to purchase a policy with at least a $1 million limit. If your general liability insurance limit is lower, however, you may need to increase that limit before you may purchase commercial umbrella policies.
- More exposure means more potential claims. Your coverage should align with your risk exposure, so businesses that are especially vulnerable to liabilities may require more coverage than others.
Is a Commercial Umbrella Policy Right for Me?
Not all businesses need or even benefit from commercial umbrella insurance. It’s important to discuss your insurance needs with a qualified insurance agent to examine your liabilities.
In general, commercial umbrella policies may be right for your business if you’re concerned about the current amount of coverage you have from your primary policies.
Here are some questions to consider:
- Is your business open to the public? Having visitors increases the opportunity for injury on your property, which adds to the risk of expensive general liability claims.
- Do your employees drive their own vehicles for business purposes? If your employees regularly run errands or do other work-related tasks in their own private vehicle, your business could be sued in the event of an accident and your auto insurance may not cover it.
- Are your employees at risk of injury? Work injuries often include lawsuits, which can quickly exceed your workers’ compensation policies.
- Do you have wealthy clients? This situation may require higher insurance coverage to account for potential losses.
If any or all of these apply to your business, you may want to consider commercial liability insurance to ensure you’re completely covered. For relatively low costs, you can be sure you’re protected from expensive lawsuits.
Visit Harris Insurance
Commercial umbrella insurance is beneficial for many businesses, but deciding if it’s right for yours depends on your industry, the size of your business, whether your business is public and what type of work you do.
If you need help deciding whether to invest in commercial umbrella insurance, it’s important to work with an experienced company like Harris Insurance. We can provide you with a variety of options for commercial umbrella insurance providers, so you can be sure you’re making the best choice for your business. We always do our best to get you the most competitive rate on your policy, and we’re always here to offer guidance and advice. Contact us today to learn more about our services and get your free quote!