All businesses are vulnerable
It’s in the news. You hear more and more about massive jury awards that result in a business’ financial ruin.
Most business owners never expect to encounter a loss that exceeds the limits of the coverage they have to manage accidents, mistakes and injuries—also known as liability insurance—but unfortunately in today’s business environment, it happens too often.
A large loss could impact the business success you’ve worked so hard to achieve and destroy your hopes for a bright future.
No matter the size of your company or how well it’s run, your business faces the potential of a devastating claim arising from an unforeseen event. For example, let’s say you own a retail store or apartment building, and a customer trips on the carpet and hits his head, sustaining serious brain injury.
You could be potentially liable for millions of dollars in medical and other payments.
Would that entire sum be covered by your existing business liability insurance? Could your business savings and/or revenue make up for the difference in what’s not covered?
If your answer is no, that’s where Commercial Excess / Umbrella Coverage comes in. Umbrella Coverage goes above and beyond basic business liability insurance limits, offering up to $10 million of additional funds to manage situations just like this.
If you are a small business owner, you might think they can’t take what you don’t have. Think again—a court can seize the business assets you currently have and even allocate future earnings to satisfy a judgment against you.
It’s never too soon to invest in umbrella coverage.
Get the Ultimate in Asset Protection
It’s your decision how to best spend each one of your hard-earned dollars. But if an unexpected major loss occurs that key decision may no longer be yours. You’ll find that Commercial Excess / Umbrella Coverage offers you a way to help ensure your business assets remain yours for less than you might expect.
Zeyger Insurance can help you get started with a commercial umbrella insurance quote by clicking below.
Commercial Umbrella Insurance FAQ
In today’s litigious society, a simple slip-and-fall accident or a commercial vehicle incident can quickly escalate into a multi-million dollar lawsuit, far exceeding the limits of a standard business insurance policy. Many business owners, even those diligent about their coverage, harbor a dangerous misconception: That their primary policies offer sufficient protection. This often leads to a rude awakening when a major claim hits, exposing their assets to catastrophic financial loss. Commercial umbrella insurance isn’t just another policy; it’s the ultimate safety net, an additional layer of liability protection designed to kick in when your underlying policies are exhausted. Imagine it as a giant umbrella spreading over your existing general liability, commercial auto, and employer’s liability policies, ready to absorb the financial shock of an unforeseen disaster. This comprehensive guide will demystify commercial umbrella insurance, explaining its crucial role, how it works, and why it’s a non-negotiable safeguard for almost any modern business. We’ll delve into its benefits, address common misconceptions, and provide actionable insights to help you secure your company’s future against the unpredictable.
Frequently Asked Questions
FAQ: What is commercial umbrella insurance?
Commercial umbrella insurance provides an extra layer of liability coverage beyond the limits of your primary business insurance policies. It kicks in when the liability limits of your general liability, commercial auto, or employer’s liability policies are exhausted. This crucial policy acts as a financial safety net, protecting your business from catastrophic losses due to exceptionally large claims or lawsuits. Without it, your business assets could be at severe risk in the event of a substantial judgment. It is designed to extend coverage limits significantly, often into the millions.
Real Results: A small trucking company faced a $3 million settlement after a severe accident. Its commercial auto policy only covered $1 million, but its $5 million umbrella policy paid the remaining $2 million. This saved the business from bankruptcy.
Takeaway: Secure your business’s financial future by understanding that umbrella insurance provides critical excess liability protection.
FAQ: How does commercial umbrella insurance differ from general liability?
Commercial umbrella insurance differs from general liability by providing additional coverage limits once your underlying general liability policy’s limits are exhausted. General liability is your primary defense, covering claims like bodily injury, property damage, and advertising injury up to a specified limit. The umbrella policy, however, sits on top, offering extra millions in coverage when a claim’s cost surpasses what your general liability can pay. Think of general liability as your first line of defense and umbrella as the cavalry that arrives when the initial line is breached. It’s a crucial distinction for robust protection.
Real Results: A restaurant’s general liability policy had a $1 million limit for a severe food poisoning claim. When the jury awarded $2.5 million, its $3 million umbrella policy covered the $1.5 million shortfall, which prevented direct financial loss.
Takeaway: Recognize that general liability is primary, while umbrella insurance offers vital supplemental protection above those limits.
FAQ: Why is umbrella insurance considered a “secondary” policy?
Umbrella insurance is considered a “secondary” policy because it only comes into effect after the liability limits of your primary (or “underlying”) policies have been completely exhausted. It does not provide first-dollar coverage for claims; instead, it provides excess liability coverage. For example, if you have a general liability policy with a $1 million limit and an umbrella policy, the umbrella policy only pays for damages exceeding that initial $1 million. This layering of coverage is fundamental to how umbrella policies function. It’s a second line of defense, not the first.
Real Results: After a data breach, a tech firm’s cyber liability policy paid $1.5 million, hitting its limit. The firm’s $2 million commercial umbrella policy was then activated, covering an additional $500,000 in remediation and legal costs.
Takeaway: Understand that umbrella coverage kicks in only after your primary policies have reached their maximum payout.
FAQ: What types of claims does commercial umbrella insurance typically cover?
Commercial umbrella insurance typically covers the same types of liability claims as your underlying policies, but with higher limits. This includes bodily injury, property damage, personal and advertising injury, and employer’s liability, once the primary policy limits for these events are exhausted. For instance, if a customer slips and falls, and the damages exceed your general liability limit, the umbrella policy steps in. It’s designed to protect against catastrophic events like large lawsuits, class actions, or major accidents involving your business. Some policies might also offer “drop-down” coverage for certain unique exclusions.
Real Results: A product manufacturer faced a class-action lawsuit for a faulty component that injured 50 people. Its general liability covered $2 million, and its $10 million umbrella policy absorbed the remaining $8 million in damages and legal fees.
Takeaway: Expect umbrella insurance to extend coverage for common liability claims that exceed your primary policy limits.
FAQ: Who truly needs commercial umbrella insurance?
Any business that faces the risk of a lawsuit or a significant liability claim exceeding its primary insurance limits truly needs commercial umbrella insurance. This includes businesses with high customer traffic, commercial vehicles, operations on client property, or those that could be sued for advertising injury. Even seemingly low-risk businesses can face unforeseen catastrophic events, and the cost of litigation and settlements nowadays can be astronomical. Essentially, if your business has assets worth protecting or simply wants to avoid bankruptcy from a single claim, umbrella coverage is indispensable. It’s not a luxury; it’s a necessity in a litigious world.
Real Results: A landscaping company, with only $1 million in general liability, caused a $3 million property fire. Its $5 million umbrella policy saved the company from having to sell assets or declare bankruptcy to cover the difference.
Takeaway: If your business has assets or faces potentially large lawsuits, umbrella insurance is a non-negotiable safeguard.
