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Commercial Umbrella Insurance
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Commercial umbrella insurance

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Commercial umbrella insurance

Commercial umbrella insurance provides coverage when you go over the limit on your general liability, employer’s liability, or commercial auto insurance policy.

Does your company need commercial umbrella insurance?

Costs from minor incidents or a big accident add up quickly. When they exceed your insurance policy limits, you’re left paying the remainder out of pocket – often thousands or more.

That’s where umbrella insurance comes into play. This policy helps most if your company:

  • Regularly handles other people’s property,
  • Is open to the public, or
  • Relies on employees driving as part of their job.

A commercial umbrella insurance policy can provide additional coverage for your:

This policy costs about $450 annually per $1 million of additional coverage.

How umbrella insurance covers costs beyond your other policies

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Umbrella liability coverage can come in handy for:

  • Client or customer bodily injury
  • Accidental breakage of client property
  • Employee vehicle accidents
  • Lawsuits over workplace injuries
  • Client contracts that require higher policy limits

For example, a customer trips over a power cable and breaks their leg in a busy computer repair shop. The customer then sues for $1.5 million – but the shop’s general liability policy has a $1 million per-occurrence limit.

Luckily, the business owner bought an umbrella policy for an additional $1 million of coverage before the accident happened. The general liability policy covers the first $1 million, and the umbrella insurance covers the remaining $500,000.

Here, umbrella insurance helps ensure you’re not stuck paying legal costs out of pocket.

Do small businesses really need extra coverage?

Small businesses have their own unique risks of injuries or accidents, but also face many of the same risks as bigger businesses. But they have fewer resources to cope with a lawsuit, and the costs of accidents are on the rise. 

That’s why umbrella insurance can be critical for small businesses that:

  • Are required to carry limits higher than $2 million
  • Have high liability risks, such as a storefront

No matter your business size, you could still get stuck with a hefty lawsuit. If you’re in a high-risk business, you should consider boosting your policy limits with umbrella insurance. It’s a relatively cheap way to amp up your coverage – and it could prevent a major headache in the long run.

What does commercial umbrella insurance cover?

With umbrella insurance, you’re still protected even when a lawsuit drains your policy limits.

If liability claims covered by your general liability insurance, employer's liability insurance, or hired and non-owned auto insurance exceed your policy limit, commercial umbrella insurance takes care of the extra costs.

For example:

General liability insurance: Umbrella insurance provides coverage when legal fees skyrocket on a third-party lawsuit over a bodily injury, property damage, or advertising injury.

Employer’s liability insurance: If an employee claims your company’s negligence caused their injury, umbrella insurance would cover a large settlement or legal costs that drain your policy limits.

Hired and non-owned auto insurance: In a serious accident or one where multiple people are hurt, umbrella insurance would cover escalating legal costs that exceed your policy limits.

Learn more about umbrella liability insurance coverage.

How does business umbrella insurance work?

Umbrella insurance boosts your liability limits in $1 million increments. You add umbrella insurance to policies you already have – it’s not a standalone policy.

If a client is requesting you carry a high insurance policy limit, or you’re worried about high risks to your business, you should talk to your business insurance agent. They can take a look at your current policy and help you figure out the amount of umbrella coverage that’s right for you.

With umbrella insurance coverage in place, you’ll be safe from having to pay out of your own pocket for costs if a claim or claims go over the limits of your underlying policy.

Umbrella insurance will cover the cost of your legal defense, court costs, even a settlement – whatever it takes to resolve the lawsuit. However, this policy won't pay for property damage.

How much does umbrella insurance cost?

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Small businesses pay a median of $101 per month for a commercial umbrella insurance policy through TechInsurance. That means they usually choose to buy more than the $1 million minimum coverage.

Your costs will vary depending on:

  • Business size
  • Location
  • Your risks
  • Your claims history
View Costs

How is umbrella liability insurance different from excess liability insurance?

Excess liability insurance is similar to umbrella insurance – so similar that the terms are sometimes used the same way. Both provide protection when the underlying policy limits run out.

The main difference is that umbrella insurance can provide liability protection over multiple policies. Excess liability insurance boosts coverage limits for only one policy, usually errors and omissions insurance (E&O) or general liability insurance.

Updated: June 29, 2022