Umbrella insurance raises your policy limit in $1 million increments, providing your business with more potential compensation per claim. The limits you choose and your level of risk both affect the cost of this policy.
For TechInsurance customers, the median cost of commercial umbrella insurance (excess liability insurance) is $101 per month or $1,212 per year. The median better illustrates what you can expect to pay since the average values include high and low extremes.
A commercial umbrella policy often costs less than it would cost to raise the policy limit on your underlying general liability, employer's liability insurance, or hired and non-owned auto insurance. That’s why many businesses choose this option, even if they haven’t reached the maximum policy limit on the underlying policy.
Sometimes, though, your insurer will require you to purchase the maximum policy limit on the underlying policy before you can purchase umbrella liability insurance. For example, you may need to hold a general liability insurance policy with the maximum $1 million or $2 million limit before you can supplement that coverage with an umbrella liability policy.
Umbrella insurance typically increases the limit of the underlying policy in $1 million increments. The higher you raise your policy limit, the more you’ll end up spending on umbrella insurance.
Most TechInsurance customers purchase a $1 million / $2 million umbrella insurance policy. This includes:
$1 million occurrence limit. While the policy is active, the insurer will pay up to $1 million to cover any single claim.
$2 million aggregate limit. During the lifetime of a policy (usually one year), the insurer will pay up to $2 million to cover claims.
The median and average costs of umbrella insurance usually increase with the policy limit:
The average annual premium for a commercial umbrella policy that covers $2 million is 25% higher than the $1 million policy. The average for a policy that covers $3 million is more than 110% higher than the $1 million policy.
To select the most cost-effective policy for your business, evaluate your potential liabilities and see if extra coverage is worth the increased cost.
Pay your annual premium upfront. You can usually pay your premium in monthly or annual installments. While it might be tempting to pay monthly premiums, consider paying the full premium instead. Many insurers offer discounts for businesses who pay this way.
Manage your business risks. If your business has no claims history, you’ll likely pay lower insurance rates. An effective way to reduce claims is to create a comprehensive risk management plan. For example, you might: