Commercial Umbrella Insurance
Understanding Commercial Umbrella Insurance
What Is Commercial Umbrella Insurance?
Commercial umbrella insurance provides additional protection that increases the limits of your existing liability policies, such as general liability insurance and commercial auto insurance. This extra layer of coverage is crucial for safeguarding your business against catastrophic losses that exceed your primary policy limits.
Importance of Commercial Umbrella Insurance
In today’s litigious environment, multi-million-dollar verdicts are common due to anti-corporate sentiment and aggressive legal actions. Businesses can’t afford to go without the extra liability limits that commercial umbrella insurance offers. This insurance helps cover:
- Legal Costs: Additional coverage for legal defense and settlement costs.
- Medical Bills: Extended coverage for medical expenses from injuries.
- Property Damage: Extra protection for damages caused by your business.
- Judgments and Settlements: Financial coverage for large judgments or settlements beyond your primary policy limits. Please note the Punitive Damages are never covered.
How Does Commercial Umbrella Insurance Work?
Increasing Your Coverage
A commercial umbrella policy kicks in once the limits of your underlying policies are exhausted. For example, if you have a general liability policy with a $2 million limit and face a $5 million lawsuit, the umbrella policy covers the remaining $3 million, ensuring you are not financially crippled by a single incident.
Flexibility and Broad Protection
Commercial umbrella insurance is versatile and can extend coverage across multiple policies, including general liability and commercial auto insurance. This provides broader protection compared to excess liability insurance, which only extends the limits of a single underlying policy.
Who Should Purchase Commercial Umbrella Insurance?
High-Risk Interactions
Businesses that frequently interact with customers, work on others’ properties, or allow public access during business hours face higher liability risks. For instance:
- Retailers and Wholesalers: Using machinery around customers increases the risk of injury.
- Service Providers: Working at client sites increases the risk of property damage.
- Businesses located in geographical areas (Legal Venues) known for high jury awards.
Getting a Quote
To get an accurate quote, you’ll need:
- Current Liability Insurance Policies: A full copy of all “Primary Policies” including premiums and details on your primary coverage..
- Business Information: Type of business, number of employees, and locations.
- Loss History for the past 3-5 years depending on your industry and the associated exposures.
