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.

A commercial umbrella insurance policy serves as an extra layer of protection. It can provide additional coverage for your:

• General liability insurance
• Employer's liability insurance (part of workers’ compensation insurance)
• Commercial auto insurance or hired and non-owned auto insurance (HNOA)

Umbrella insurance boosts your liability limits in $1 million increments and is often needed in order to fulfill a contract that requires higher than standard policy limits. Even when it's not required though, it's still highly recommended for extra peace of mind.

Umbrella coverage can help pay for your medical expenses, legal defense, and even a settlement. However, this policy won't cover property damage.

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

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

This includes:

Umbrella insurance is not a standalone policy; you add it to policies you already have. Think of it almost like a safety net.

For example, suppose 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 only 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 would pay for the first $1 million, and the umbrella insurance would then cover the remaining $500,000.

With umbrella insurance in place offering higher limits on what is covered, 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.

Commercial umbrella insurance is valuable to a variety of small businesses, including freelancers, limited liability companies, and independent contractors.

Umbrella insurance is useful for all professions, including:

IT staffing agencies can have heavy foot traffic from clients of all walks of life. This can be a liability.

For example, suppose a client trips in your agency and sustains serious injuries that leave them with a chronic health problem. To recoup the cost of medical expenses, they decide to sue the agency for millions of dollars in damages. Umbrella insurance would then help the store pay for the damages.

In order to complete their jobs, consultants may have to sit at their computers for long periods of time. This could result in several health issues, such as carpal tunnel, which may be a liability for consulting firms and professionals.

For example, suppose a long-time employee at a consulting firm sues their employer over a chronic, work-related health problem that cost them more than $1 million dollars in hospital stays and physical therapy. In this situation, an umbrella policy can cover the company's legal expenses, including a court-ordered judgment or a settlement.

Electricians usually visit homes and businesses in company vehicles to perform services for their clients. If their installation specialists are involved in a car accident that exceeds the company's commercial auto policy's limits, umbrella insurance would take care of the excess costs.

For instance, an electrician accidentally backs a company van into a client’s warehouse, destroying inventory and causing millions of dollars in damages. The client sues for damages. In this situation, a commercial umbrella policy would help cover the supplier's legal expenses and damages beyond their auto liability policy limits.

Risk management steps can help many businesses avoid some of the most common risks, but having the proper coverage in place will be essential for those unavoidable mistakes or incidents that happen on the job.

Nonprofits and social services businesses face numerous risks, ranging from car accidents while driving business-owned vehicles to accidental client injuries at the office. Umbrella insurance provides key extra coverage for an array of risks.

For instance, while on the way to do a home visit, a social worker driving a company car causes a pile-up. The other drivers sue for compensation that totals more than a million dollars. In this situation, a commercial umbrella policy can cover medical expenses, the cost of hiring an attorney, and the amount judged fair for damages.

Commercial umbrella insurance provides excess coverage to an existing policy's limits, but it doesn't cover all risks associated with running a business.

To fully safeguard your small business, you should get other business insurance policies and remember these important considerations to protect against the following exclusions: