Commercial Umbrella Insurance 101

When your standard commercial business insurance plan coverage falls short in the event of liability claims, commercial umbrella insurance can come in handy. An umbrella insurance plan can also be designed to provide protection for those liability claims that your basic plan doesn’t cover. Here’s what you should know about commercial umbrella insurance.

Types of Commercial Umbrella Insurance Coverages

A commercial umbrella insurance plan is an extension of your existing business insurance policy. It’s useful coverage for risks that have coverage limits in your standard plan. Different business owners have different needs. Some establishments need special types of coverage to protect their unique assets. An umbrella plan extends policy coverage limits and kicks in when the basic policy maxes out for a claim.

The two main types of umbrella coverage are:

  • Excess liability coverage and
  • Gap coverage

Excess liability covers expenses that exceed your primary policy limits. Gap coverage provides protection for certain risks not covered in your primary plan.

Commercial umbrella insurance is particularly useful to small business owners. It allows you to relax and focus on running your operation, knowing that your business is extensively covered.

Is Commercial Umbrella Insurance Vital for your Business?

The answer to this question comes down to how much protection you want for your business. Umbrella insurance can cover legal expenses during liability claims that your company may have to face, especially for certain types of claims that your standard plan doesn’t cover. Without umbrella coverage, your business may be held liable for an unexpected claim, which can drain its capital base in legal costs.

Even though business insurance isn’t mandatory, it’s helpful to carry one for multiple reasons. It can pay for damage and liability expenses that your company might not otherwise be able to afford. Nonetheless,  standard plans only cover so much, whereas commercial umbrella insurance picks up where the basic insurance coverage ends.

Company size is one of the most important factors determining whether you need a business insurance policy and umbrella coverage to supplement it. If you are running your own independent freelance service and don’t have employees, your insurance expenses may be minimal. However,  if you hire people, you’ll need at least workers’ compensation coverage, which is mandated by all states.

The more your business expands with employees, machinery, and square footage, the more you’ll need to look at various types of special commercial coverage.  It is possible to get sufficient coverage with a standard liability plan and umbrella coverage, but it essentially depends on the nature of your business. Umbrella insurance covers liability claims not found in standard plans.

When you consider legal fees and settlement costs, all it takes is one lawsuit to bring an entire enterprise down. Contact us at Knight Insurance Services for more information on how commercial umbrella insurance can help protect your business.

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