Commercial umbrella provides an extra layer of protection by giving you extra liability coverage to help pay costs over and above your general liability or other liability policy limits.
In other words, commercial umbrella insurance complements your other liability coverages by taking over when your other liability coverage limits have been reached.
For example, if your company is found liable for a customer’s injury at your workplace and you are sued for $1.5 million but only have $1 million in liability coverage, a commercial umbrella policy could make up for the $500,000 shortfall.
Without this additional coverage, you will pay out of pocket for expenses that cost more than your coverage limits, such as:
- Legal fees
- Medical bills
- Damage expenses
Umbrella insurance isn’t offered as stand-alone coverage. It works together with your other liability coverages, such as general liability insurance –which is your main policy.
A commercial umbrella policy provides extra coverage for certain types of liability insurance by extending your primary policies.
Commercial umbrella insurance covers the same types of costs as business liability insurance such as medical expenses, attorney fees and damages when your company faces a lawsuit.
Insurance companies write umbrella policies with aggregate limits. These limits can range from $1 million to $2 million. This means your insurance company will only cover claims up to that amount.
Without umbrella coverage to extend your policy, you would have to find a way pay for the amount it doesn’t cover. This can put your business and property at serious risk.
The more your business interacts with clients and customers, the higher your liability risk will be. Your risks can be even greater if your employees use heavy machinery or dangerous equipment.
Business owners should consider commercial umbrella insurance if they think the cost of a claim could ever exceed their base liability limits.
Business umbrella insurance can be helpful if your business:
- Frequently interacts with customers
- Works on someone else’s property
- Is open for the public to visit
If people can access your business or property, it increases the risk of bodily injury. Commercial umbrella insurance would help with the costs for their medical expenses, lawsuits and judgments against your business.
Frequently working offsite also creates an increased liability risk.
Working at your customer’s house, for example, makes it more likely you’ll cause property damage, like accidentally putting holes in walls, breaking windows, or damaging cars. If that happens, business umbrella coverage can help cover the costs that exceed your liability limits.
Your cost for commercial umbrella insurance depends on your:
- Amount of underlying coverage
- Type of business
- Business size
Some industries face more risks than others, which can increase your cost for commercial umbrella insurance. For instance, if you have a construction business, your business umbrella coverage cost may be higher than a retail business.