What is commercial umbrella insurance?
By Leana Schwartz, Independent Commercial Insurance Agent
Commercial umbrella insurance offers businesses extra liability coverage to protect them from potentially devastating losses to an extent that simple commercial insurance cannot. As its name implies, umbrella insurance extends over and above an existing policy, and takes over where existing insurance stops.
What does commercial umbrella insurance do?
Commercial umbrella insurance has two specific functions. First, umbrella insurance provides coverage for a higher amount of liability than the primary commercial liability insurance policy. Second, umbrella insurance broadens the scope of coverage vs. the primary policy by superseding many exclusions and/or other terms and conditions in the existing policy.
What does commercial umbrella cover?
As mentioned, umbrella insurance provides an added layer of protection for a business if the costs of a claim or lawsuit exceed the limits of the primary commercial insurance liability coverage. Umbrella insurance covers claims such as:
- Medical expenses
- Property damage
- Attorney fees
- Lawsuit settlements
In addition to these claims, commercial umbrella insurance can also be used to cover some exposures for which no primary coverage exists, or in the event the primary policy has exclusions which are not present in the umbrella policy.
What is excluded under umbrella insurance?
Commercial umbrella insurance does not cover everything, however. Common exclusions include:
- Worker’s compensation and other employment-related practices
- Liquor liability
- Product or work recall
- Impaired property
- Electronic data
- Racing activities
What does commercial umbrella insurance cost?
Umbrella insurance isn’t offered by itself; it works in conjunction with preexisting commercial liability insurance. Generally, a business can get $1 million in additional umbrella coverage for as little as a few hundred dollars per year.
Commercial umbrella is tailored to fit a business
Every business has unique needs, and, like all forms of commercial insurance, umbrella insurance can be specifically tailored to a particular business. Meeting with an experienced and knowledgeable insurance agent will ensure that a business gets the coverage it needs.
To recommend the right umbrella coverage, a commercial insurance agent will ask questions about:
- Current general liability, business automobile insurance, commercial property, and other types of commercial insurance.
- Professional liability, errors or omissions liability, employee benefit liability, liquor liability, or employment practices liability coverage, if any.
- Operational and financial details of the business.
- The company’s officers, positions, and experience.
- Payroll, business assets, and contractual obligations.
- Any prior losses the company has experienced.