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Understanding Commercial Umbrella Insurance

Posted on: February 12, 2018 by Signature Insurance Group

Commercial umbrella insurance is not always at the top of the list for business owners when thinking about protecting their assets. However, a commercial umbrella policy is a great benefit for owners of businesses both small and large.

What is Commercial Umbrella Insurance?

Commercial umbrella insurance is a type of liability insurance that can extend the coverage of a business owner’s general liability policy, and other commercial liability policies. It acts as a secondary line of defense for your insurance coverage and serves as a way to cover gaps in insurance. Commercial umbrella insurance is typically bought and used in conjunction with general liability insurance, auto liability insurance, workers compensation and/or employers liability insurance.

Cost vs. Benefit

While commercial umbrella insurance is often seen as an unnecessary extra cost, it can actually be a great cost-saving tool for businesses. Rather than raising the limits of a business’s individual liability policies, thus increasing those premiums, a commercial umbrella policy can add one or two million dollars of additional coverage for just a few hundred dollars per year.

For example, a slip and fall injury occurs in a business, and a settlement of $1.2 million is reached. The business’s general liability insurance has a limit of $1 million, leaving the business owner to cover the addition $200,000 plus attorney fees and court costs. With a commercial umbrella policy, the additional settlement amount and fees would be covered.

Who Benefits from Commercial Umbrella Insurance?

While commercial umbrella insurance is not required for any business to operate, it is a valuable option for business owners and can even be an attractive element to potential clients. Businesses that can benefit from commercial umbrella insurance include:

  • Businesses that serve high net-worth clients or clients that require higher liability limits.
  • Businesses with contracts that require a higher liability coverage.
  • Businesses that have significant general, auto or employer’s liability exposures.
  • Businesses that have prior liability losses.
  • Businesses that can not afford to lose $1 million or more to a liability case.

What Does Commercial Umbrella Insurance Exclude?

Even the best commercial umbrella policies will have their limitations. Commercial umbrella insurance can’t be applied to errors & omissions or professional liability insurance claims, commercial property insurance claims, directors & officers liability claims, or cyber liability claims. In addition, commercial umbrella insurance is not a standalone policy so it can not provide coverage for expenses resulting from a claim that is not already covered by an underlying policy. Consult with your insurance agent to insure that you have the proper underlying coverage before adding a commercial umbrella policy.

About Signature Insurance Group

Signature Insurance Group has been working since 1969 to provide comprehensive insurance solutions to individuals and businesses across the United States. We offer a range of insurance products and services in risk management, employee benefits, business insurance, and personal insurance, and we pride ourselves on our commitment to creating “Signature Relationships” with our clients where we commit to providing the best, most comprehensive service possible. To learn more about our goods and services, contact us today at (800) 464-3606.

Posted in: blog Business Insurance Commercial Umbrella Insurance