What is commercial umbrella insurance?

Commercial umbrella insurance is an additional coverage that complements other commercial or business liability insurance. When there are costs that extend beyond general liability or other types of liability coverage limits, this type of insurance steps in to cover the rest. It works in conjunction with other liability coverage, although it can be purchased as a stand-alone policy that that is different from primary insurance. This type of insurance covers most of the same things business liability covers, such as attorney fees, medical costs, and other damages that could be awarded in a lawsuit against your company.

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When do I need to be aware of commercial umbrella insurance?

One example of when you’d rely on commercial umbrella insurance is when a company sues you for more than the coverage limits of your liability insurance. For example, you might have $1 million in liability, and a client sues your company for $1.25 million and wins. Commercial umbrella insurance would step in to cover that additional $250,000, supposing it falls within your policy’s coverage limit.

What is important to know about commercial umbrella insurance?

As a business owner, it’s important you understand everything about your insurance coverage. Just as with any other type of insurance, there are some things you should know so you can make the most of your policy:

Commercial umbrella insurance doesn’t cover the costs of every type of claim, including property claims.
The higher your liability risk, the greater the amount of insurance you should carry, so you should carefully consider your risks before deciding on a policy limit.
Some factors that help determine the cost of this insurance include the size of your business, the type of business you are in, and the amount of underlying coverage you already have.
Commercial umbrella insurance is perfect for wholesale, retail, agriculture, freight, sales, and a variety of other industries.

When the underlying limits of a commercial umbrella insurance policy are exhausted, the existence of an excess liability policy within a company’s insurance tower provides higher limits on top of the original underlying policy.