Do You Need Commercial Umbrella Insurance for Your Business?

Do you own a business? Do you have a commercial umbrella policy as part of your overall business insurance package? If yes, you have significantly increased your protection from lawsuits and other liability claims. If no, you need to seriously consider the importance of commercial umbrella insurance.

What is Commercial Umbrella Insurance?

Commercial umbrella insurance is a type of business insurance policy that provides excess liability protection for your business. It provides supplementary coverage for your business if you are sued and must pay legal fees and settlements.

But do you need it? Imagine your business is sued and is required to pay a $3 million liability settlement. Perhaps you have commercial general liability insurance with a $1 million coverage limit. How would you pay for the additional $2 million? Would you have to liquidate your business assets? Would you be forced to close your business for good?

Lawsuits are prolific these days, and while large settlements like this may be rare, they do happen. Commercial umbrella insurance is a very affordable way to protect your business in these instances, and even in cases that are less extreme but still can be devastating to your business.

An umbrella adds another layer of protection to your other business insurance policies, including commercial general liability, employer’s liability, and hired and non-owned auto liability insurance. Having a business umbrella policy essentially raises the liability limits of your other policies, instead of raising the limits of each individual policy, which can be far more costly. A commercial umbrella policy applies excess liability protection to all of your other policies through a single, affordable policy.

There are some exclusions, however. Most commercial umbrella policies exclude protection for errors and omissions (professional liability) claims, product recalls, workers’ compensation claims, and coverage for asbestos-related claims, pollution, war and terrorism.

Commercial umbrella insurance typically provides $1 to $5 in excess liability coverage, and it is considered to be an appropriate investment for business owners with significant assets or who may be susceptible to lawsuits. It provides protection for costs related to lawsuits, legal fees, court awards and out-of-court settlements. The amount of coverage you need depends on the type of business you own, the coverage you already have through your other business insurance policies, and the amount of your business assets.

Need more information about commercial umbrella insurance? We can help you analyze your risks and help you get the right amount of coverage to protect your assets and keep you in business even if you are sued. Contact us today to learn more.