A commercial umbrella insurance policy provides additional millions of protection against lawsuits, over and above the $1 million limit that is typically included on general liability and business auto policies.
For clients with workers comp policies, the umbrella also goes over the employer’s liability portion. This can be very important in the event of an extra-large bodily injury or property damage claim where your business is being sued.
An Umbrella Insurance Policy: The Essentials
An umbrella liability policy is always coordinated with “underlying” policies that already provide liability protection from injury or damage. For example, a business auto policy may already have $1 million of protection for lawsuits related to injuries caused by your company vehicles. But if your driver injures multiple people in a single incident, $1 million might not be enough to pay for each claimant’s lost wages, medical bills, and pain and suffering. An umbrella provides these additional layers of protection against large claims.
Why Might Your Business Need Additional Liability Protection?
The more assets you have to protect, the more appropriate it is to carry a commercial umbrella. If your business has been successful and your business assets exceed $1 million, you would typically start increasing your limits of protection.
If you are a contractor, service provider, or manufacturer, you may have clients who require a certain limit of liability to appear on your certificate of insurance. It is not unusual to see a $2 million limit required. A $1 million umbrella, on top of $1 million underlying, is the way to satisfy this type of requirement.
What Does an Umbrella Policy Cover?
The umbrella covers the same types of claim as the underlying policies cover:
Bodily injury – such as a slip and fall, or a car accident, where your company is responsible for injuries to a 3rd party.
Property Damage – such as an accidental fire or water damage that you might cause in the course of providing your services.
Personal Injury – libel, slander, and defamation of character, among other things, are covered by your general liability – and umbrella.
It is good to note, umbrellas generally do not “go over” employment practices liability, cyber, or directors and officers coverage – so despite the name (umbrella) – they don’t cover every situation or claim.
How Much Umbrella Coverage Do You Need?
This is a good conversation to have with your agent. It is a balance between cost and benefit, combined with your perception of risk and the chance that you could cause a large claim.
About Rodrian Insurance
Rodrian Insurance specializes in giving you insurance solutions that perfectly match your business and personal life. We provide insurance options that offer excellent coverage while remaining within your budget, based on a thorough understanding and assessment of your needs, circumstances, and financial capability. Find out more about how Rodrian Insurance can fulfill your insurance needs. Call or text us at (262) 781-4750 or email us at info@rodrian.com.
