The primary purpose of commercial umbrella insurance is to protect your business from financially damaging lawsuits. It’s essentially a backstop to your primary business policies, including commercial auto insurance and general liability insurance. Commercial umbrella insurance kicks in when you’re required to pay liability claims that exceed the liability policy limits of your business’s primary insurance coverages. Here’s how commercial umbrella insurance can help protect your business.
Businesses that need commercial umbrella insurance include, among others:
• Those that are required to carry a high-limit policy to work with certain clients.
• Business operations that expose you to high liability risks, like businesses with heavy foot traffic.
What’s Covered Under Umbrella Insurance?
Commercial umbrella insurance provides coverage when you are required to pay liability claims that exceed the policy limits of the underlying insurance. So, umbrella insurance can possibly protect your business from all sorts of liability claims, including:
• Reputational damage
• Product liability
• Auto accidents
• Customer injury
Your umbrella coverage is designed to extend beyond your primary coverages, including your commercial auto insurance (including non-owned and hired auto), commercial general liability, employee benefits liability, and workers’ compensation. Besides, it can protect several properties in various locations.
Benefits of Umbrella Insurance
Accidents can happen even after you have done all you can to create a safe environment for your customers and workers. This means it’s virtually impossible to protect your business from the numerous risks through prevention alone. Unforeseen and uncontrollable events and freak accidents will likely happen at some point, and this can lead to costly lawsuits and liability claims that exceed your primary coverage limits. It’s at this point that commercial umbrella insurance becomes useful. Many businesses can be financially devastated by crushing lawsuits, especially if they don’t carry commercial umbrella insurance coverage. Therefore, carrying umbrella insurance is an essential risk management strategy for businesses that want to protect assets and stay afloat. It’s about being prepared for worst-case scenarios.
What to Look out for When Purchasing Commercial Umbrella Insurance
Firstly, commercial policies vary from insurer to insurer. Some insurance companies may offer plans that are referred to as umbrella insurance policies when they are actually excess policies. The two aren’t identical in any way. Umbrella policies provide extra limits as well as more extensive coverage than your primary insurance. Conversely, excess policies offer extra limits but no wider coverage than the underlying insurance.
Secondly, some umbrella policies include SIR (self-insured retention), a set amount that you must pay before your commercial umbrella policy makes any payment. SIR applies to the liability claims covered by your umbrella policy but not your underlying policies.
Cost of Commercial Umbrella Insurance
The cost of your policy will be hinged on your claims history, the type and scale of your business operations, and the limits of your policy. A policy that comes with a $10 million limit will cost more than a policy that has a $5 million limit. Businesses in riskier industries, such as construction, will pay higher rates than those in less risky industries.
If you want to enjoy the extra protection that comes with commercial umbrella insurance, our experts at Knight Insurance Services will help you find a policy that suits your unique business needs. Contact us today to get started!