An Umbrella Policy Is Critical For All Small Business Owners

An Umbrella Policy Is Critical For All Small Business Owners

by Mike Compton

On average, approximately 40% of businesses will file an insurance claim over a 10-year period, which means there is a good chance that your business could also suffer a loss. It is best to always be prepared by making sure you have sufficient coverage if, and when, an issue arises. General liability insurance is a good starting point, but has some drawbacks when it comes to limits. An Umbrella policy can provide additional coverage which will give you peace of mind.

Umbrella insurance for businesses, also known as commercial umbrella coverage, provides your company with an additional limit of liability beyond general liability insurance. This type of policy is very similar to a personal umbrella policy, which provides additional liability over and above your home insurance or auto insurance coverage.

The commercial umbrella policy provides additional protection to help prevent having to pay out-of-pocket when your liability exceeds the limits of the general liability insurance (or other policies you may have the umbrella limits are extended over). An umbrella policy responds to the loss only after the primary insurance has paid its limits. Here are some typical policies that may fall under the umbrella policy: 

  • General Liability: Commercial general liability (CGL) is a type of insurance policy that provides coverage to a business for bodily injury, personal injury, and property damage caused by the business’s operations, products, or injuries that occur on the business’s premises. Commercial general liability is considered comprehensive business insurance, though it does not cover all risks a business may face.*
  • Commercial Auto: Commercial auto insurance covers legal fees and other expenses if a business-owned vehicle is involved in an accident.
  • Employer’s Liability: Employer’s liability insurance is an insurance policy that handles claims from workers who have suffered a job-related injury or illness not covered by workers’ compensation. A type of liability insurance, it can be packaged with workers’ compensation to further protect companies against the costs associated with workplace injuries, illnesses, and deaths.**

There are a lot of reasons why a commercial umbrella policy is a valuable option for your business.  Without this extra coverage, you would have to pay out of pocket to cover items such as medical bills, legal costs, legal judgments, and property damages that exceed the limit of your primary liability policies.  Umbrella policies are sold in increments of one million dollars and can be increased as far as your budget allows. We are always happy to work with you to choose a policy that provides the greatest amount of protection for your business.

*via Investopedia
**via Investopedia