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  • Commercial Umbrella Insurance: What You Need to Know

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    Commercial Auto, General Liability or Other Insurances

    A business insurance policy typically combines two critical coverages: property and liability. This is the fundamental starting place for all businesses to address risk. You’re gaining financial protection from threats, such as fire, lawsuits, thefts, and a whole lot more.

    Depending on where and how you do business, you could then layer in other policies to address other potential hazards. Commercial umbrella insurance can be used to complement—or supplement—coverages not met by your other policies, including General Liability and Commercial Auto.

    General Liability Insurance
    A business’ General Liability policy is written to cover potential liabilities such as personal injury, contractual liability, and extended coverage to other parties including employees and business partners. General Liability, if written properly, will also cover the kinds of practices that are unique to your kind of business. For example, if you own a bar, you’d need to address liquor law liability.

    The value of a Commercial Umbrella policy is that your General Liability policy may not provide you with adequate protection in the case of a catastrophic event—such as a million-dollar judgment resulting from an employee’s negligence. The coverage that kicks in after the limits on your General Liability policy have been exhausted could potentially save you from having to close your doors.

    Commercial Auto Insurance
    A Commercial Auto policy provides coverage for you, your employees, and the vehicles you own, lease, rent or borrow—both on the road and off. An incident involving your cars, trucks, vans, or other specialty vehicles could leave your business vulnerable to complex high exposures, putting your assets at risk.

    As with General Liability, carrying a Commercial Umbrella policy can help you ensure that your business has adequate financial protection. Should an accident involving one of your business vehicles trigger financial damages that exceed your Commercial Auto’s limits, the added coverage could make all the difference.

    Other Insurance
    Other insurance policies that can potentially be supplemented with Commercial Umbrella insurance include Employment Practices Liability, Workers Compensation, Liquor Liability, and Business Watercraft.

    Importantly, if you're a business that has employees, then you should be carrying Employment Practices Liability, which helps protect you from employment-related claims.

    As mentioned previously, Commercial Umbrella will not apply in situations where malpractice or other professional liability coverage would be called for.

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    Take the time to review your existing insurance policies and their coverage limits. Would the coverage be adequate in the case of a potential catastrophic event? Can you see any gaps that might be addressed by a Commercial Umbrella policy?

    • To qualify for a Commercial Umbrella policy, your underlying policies will need to carry limits at a specific threshold. Just as an example, if your underlying general liability carries a limit of $250,000, an umbrella carrier may request that you modify this policy and raise those limits to be eligible for an umbrella as a secondary policy.
    • Keep in mind that if you engage in a particularly risky type of business, it may not be eligible for commercial umbrella insurance.