Commercial Umbrella Insurance

This umbrella insurance builds on the protections afforded by underlying commercial policies to further enhance a business’ insurance protections. This insurance is a supplemental liability insurance that’s widely available to businesses. Once the limits of underlying, primary policies have been set to their maximum allowed amounts, this umbrella coverage is one of the few ways that businesses can purchase further coverage.

These policies usually provide highly affordable coverage -- and a lot of it. Many policies offer millions of dollars worth of coverage yet have premiums that are relatively low. Insurers are able to provide such high coverage limits and keep premiums low because these are secondary, rather than primary, policies.

An umbrella policy may build on the protections of underlying, primary policies in two distinct ways. First, a policy might offer limits beyond what primary policies are able to provide. For example, a general liability insurance policy may have a maximum limit of $3 million. A commercial umbrella policy might build on this coverage and add another $5 million worth of protection, effectively giving a business $8 million worth of coverage. Second, an umbrella policy may fill in one or more coverage gaps that primary policies have. A business’ general liability policy, for instance, might have an exclusion that leaves the business exposed to possible lawsuits. An umbrella policy’s terms and conditions may cover this exclusion, offering the business protection where it previously had none.

Commercial umbrella and excess liability policies both offer supplemental insurance coverage for businesses, but there is an important difference between the two policies. These policies have their own, unique terms and conditions. In contrast, excess liability policies adopt the terms and conditions of the underlying policy that they supplement. Excess liability policies don’t have unique terms and conditions. As a result of this difference, this umbrella insurance normally offers more robust protections than excess liability policies are able to. While these policies can supplement multiple policies at once and fill in coverage gaps, excess liability policies can usually only supplement one primary policy -- and they typically can’t fill in gaps.

Many businesses can benefit from the additional protections that these umbrella policies provide. The following are just a few examples of some businesses that may want to purchase this type of insurance: Professionals, as most professionals don’t have the financial resources that a drawn-out liability lawsuit could require; businesses that have lots of property or assets, as they might be the target of an opportunistic lawsuit; and companies in high-risk industries, as they’re more likely to have a covered incident or claim. Additionally, nonprofit organizations and municipal governments might also want to procure this umbrella coverage.

This insurance policy covers things like a customer getting injured on your premises, a product causing damage to someone or something, and other types of claims common during the course of business. The amount of protection you need in your umbrella insurance policy will depend on your type of business, products, and overall level of risk as it pertains to your specific business.