Commercial umbrella insurance is essentially coverage above and beyond other liability policies that you may have. Without this type of coverage you would have to pay out of pocket for losses that exceed your other policies limits.
Commercial Umbrella policies extend the limits of certain liability polices, most commonly Workers Compensation, General Liability and Business Auto. There may be other policies eligible as well, such as a stand alone Cyber Liability policy.
When a claim exceeds the limits of an eligible underlying policy, the umbrella coverage kicks in and will pay the excess loss up to the umbrella’s limit.
For example – let’s say one of you employees driving a company truck caused a multicar pileup on the freeway resulting in $300k in damaged vehicles and $900k in injuries for a total loss of $1.2M. If your Business Auto policy had a limit of $1M then you would be responsible to pay anything above that, in this case $200k. If you had an Umbrella policy then it would cover the $200k.
Any business could benefit from umbrella coverage – it’s worth speaking with your agent to understand the potential risks your business faces. Generally speaking, the more interaction you have outside your place of work, or if you have people visiting your workplace the higher potential there is for a liability loss and therefor the more appropriate it would be to consider an Umbrella policy.
Umbrella policies extend an existing underlying policy, so you cannot get one on it’s own.
Umbrella policies have limits too – typically ranging from $1-$15 million, keep in mind this limit is on top of the limits of the underlying policies.
They don’t cover everything – Umbrella policies do not extend coverage to Commercial Property policies and it is less common for them to apply to other policies such as Pollution and Professional Liability.
An umbrella policy does not have to be written by the same insurance company that writes your other policies, they can offer the flexibility to extend coverage on multiple policies from multiple insurers.
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