Commercial umbrella insurance

Just as you use an umbrella to provide you with extra coverage during a rainstorm, a commercial umbrella policy can help your business keep its assets. In today’s society, the act of suing is becoming increasingly common for individuals who feel they’ve been wronged by a small business or large corporation. While in many cases, there are reasonable reasons to file a lawsuit, in other situations, it may not be the most rational decision. Despite this fact, your business could be at risk of being named in a lawsuit, no matter how careful you and your employees work to be safe and in compliance. Your business should already have a comprehensive business liability insurance plan, such as a business owner policy. Problems arise when your coverage is exceeded for an expensive claim or lengthy lawsuit. In this situation, it may be best to prepare yourself by purchasing commercial umbrella insurance.

Why your business may need an umbrella policy

Commercial umbrella liability insurance is additional coverage to help in situations such as expensive lawsuits or devastating liability claims. Many business owners wonder what is an umbrella policy? This is a policy that adds to your current liability or commercial auto insurance plan and gives your company more protection and safeguarding against the most extreme financial situations due to a claim. Most insurance policies have a maximum payout amount for a claim. With a commercial umbrella policy, you get coverage when you’ve exceeded that amount.


Scenarios where umbrella policies can help

Some business owners may not realize how at risk they may be at for a potentially catastrophic claim scenario. Even if they have the recommended business insurance coverage, their claims could exceed what is covered in their insurance policy contract. A large lawsuit could devastate a small business and impact the owner’s personal financial situation as well. In these cases, a better plan is to be ready with a solid umbrella policy that helps your business stay afloat in these tough times. It’s smart to partner with a trusted insurance company and agent to help you figure out if you’re at risk of potential disaster. Here are some typical situations where umbrella insurance is helpful:

  • Additional liability coverage for injuries Liability for bodily injury can sometimes exceed your current policy’s limits if something catastrophic happens to a customer, employee or visitor on your business’ property. If someone falls or injures himself and suffers an extreme injury or death, you could be held liable. A serious injury could lead to significant medical expenses, sometimes for the rest of that person’s life. In this case, an umbrella policy could pick up the tab when your standard insurance policy runs out.
  • Liability coverage for property damage Property damage can also lead to a drained bank account if you don’t have adequate liability coverage for your business. Car accidents are the most common cause of damaged property. If a company car is involved in a serious car accident involving numerous vehicles, you may have a problem. An umbrella policy could help keep your assets from being used to pay the bill.
  • Property owners coverage Business owners who also own property can also be at risk of a serious lawsuit. It’s common for landlords to be held liable for mishaps involving falls along the perimeter of a property’s exterior. Or, if your tenant does something irresponsible, you as the owner could be held liable. Medical expenses for something related to your tenant’s dog or the tenant’s lifestyle can always be put back onto the owner.
  • Slander or libel coverage Business owners sometimes get caught up in serious lawsuits related to the things they say online or in person about competitors or individuals. Defamation lawsuits are sometimes filed by customers, former workers or other individuals against a business and can take many years and cost thousands of dollars in legal fees. While a smaller lawsuit could be settled and covered by your business’ regular insurance policy, some lawsuits linger for so long that your coverage runs out. Instead, put something like this behind you and stop worrying about your legal issues by letting your umbrella policy do its job.
  • Emotional damages or mental anguish coverage Personal injury lawsuits may also have another component to them beyond the medical expenses, emotional damages. Also called mental anguish, this type of expense is something that is typically awarded to those suing for medical malpractice. The courts have sometimes awarded millions of dollars to people suffering from serious mental anguish over a botched medical procedure. When an insurance policy has been pushed to its limit, the umbrella policy can kick in for this situation. Otherwise, your business could be forced to fold and no longer exist.


How an umbrella policy comes into play


An umbrella policy can be added to your current insurance policy package for your company. You and your agent can look at potential business risks and determine the right amount of coverage you’ll need. Usually, your other policies will have stated limit amounts in your paperwork. It’s important to pay attention to the verbiage and find out what your policy limits are. These will be stated as dollar amounts and are the caps to the amount of payout you’ll receive for a claim. If any expenses exceed these caps, your umbrella policy pays out the rest so you don’t have to.


A policy designed with your needs in mind

The final step is to meet with your commercial insurance policy agent and discuss potential options for umbrella insurance. Just like other insurance policies, there are different choices for this optional insurance coverage. You and your agent will look at the current financial documentation of your business, such as revenue reports, profit and loss statements and loans or assets you have. Your agent may also want to know about your employees and any prior claims you’ve submitted. Then, you’ll be given a premium amount to be added to your current insurance cost.

If you want to get the maximum amount of coverage for your business, it’s vital to consider adding an umbrella policy. When you get caught in a storm of catastrophic events happening to your business, your umbrella policy can keep you covered and safe.


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