Why Does Your Business Need a Commercial Umbrella Policy?

Approximately 40 percent of businesses in the United States that are unprepared to operate after a disaster shut down once that disaster happens. 25 percent of all businesses shut down within the first two years because they lack adequate post-disaster cash flow or revenue.

These statistics are depressing, but there’s good news. With adequate insurance, your business can survive the unexpected. It’s the reason many businesses are opting for a commercial umbrella policy in addition to their current business insurance.

But what exactly is a commercial umbrella policy? How does it work? More importantly, how can this type of insurance help your company?

If you’re asking yourself these questions, keep reading.

What Is Commercial Umbrella Insurance?

Commercial umbrella policy coverage is a type of insurance policy that offers extra coverage over your existing commercial business insurance. This policy kicks in the moment the cost of a liability claim surpasses the coverage limits of such liability policies, including:

  • General liability insurance
  • Hired and non-owned insurance
  • Workers comp insurance

Note that umbrella insurance isn’t a separate insurance policy. Rather, it’s added to the policies a business already has.

Every company can benefit from this type of insurance. Disaster can strike unexpectedly, and your standard liability policy won’t always be able to cover the costs of a large liability claim.

How Commercial Umbrella Insurance Works

Commercial liability insurance extends the limits of your primary liability policies. One of these is commercial car insurance.

For instance, your business is found liable for a client’s injury at your company. The client sues for $2 million, but you only have $1.5 million in liability coverage. Your commercial umbrella coverage will make up for the shortfall, subject to its coverage limits.

What a Commercial Umbrella Policy Covers

Generally, a commercial insurance policy will help you cover the claims of bodily injury, both for employees and customers. The policy can also help pay for property damage caused by your business to another party’s belongings.

Again, remember you must have general liability insurance before getting commercial umbrella insurance.

Why You Need Commercial Umbrella Insurance

Many small businesses assume commercial umbrella insurance is only for big companies. Nothing could be further from the truth. All businesses could benefit from the added layer of protection this insurance affords.

An expensive lawsuit involving an auto accident or serious personal injury can cost millions. Umbrella coverage protects you from massive legal fees that could easily bankrupt your company.

When a lawsuit drains the limits of your underlying policies, you can count on your umbrella coverage to step in and protect your income and assets.

Some companies take commercial umbrella insurance because their clients demand it. Certain contracts will often require that a company carries a certain amount of insurance coverage. This is meant to protect the client in case something goes wrong.

Sometimes, your existing liability policies don’t meet the client’s requirements. Taking an umbrella insurance policy can help make up for the deficit.

What Is the Cost of Commercial Umbrella Insurance?

Per month, the median cost of an umbrella insurance policy is $101. That translates to $1,212 annually.

Typically, insurance providers offer the policy in $1 million increments. As your policy limit increases, so does the cost. Aggregate limits typically range between $1 million and $15 million.

What Commercial Umbrella Insurance Does Not Cover

While commercial umbrella insurance does cover many things, there are certain claims that are exempted. Also, this policy doesn’t extend the limits of some types of policy. One example is commercial property insurance.

For instance, there’s a fire in your company and your equipment suffers significant damage. If the cost of repair and replacement of this equipment surpasses your property coverage limit, you’ll have to pay for that extra cost out of pocket.

Umbrella coverage also doesn’t extend the limits of your professional liability policy.

Business With Greater Need of Commercial Umbrella Insurance

We mentioned that every business could benefit from commercial business. But there are certain types of businesses that should prioritize this type of coverage. If you interact with customers in person in your business, this policy should often be a priority.

The liability is even higher if you have workers in your company who use dangerous equipment or heavy machinery.

If you are more at risk of claims and think that the cost of a claim might be greater than your liability limit, don’t think twice about getting commercial umbrella insurance. The same should be the case for businesses that work on other parties’ properties or allow the public to visit during hours of operation.

Getting a Commercial Umbrella Insurance Quote

Many insurance providers allow you to get an online commercial umbrella insurance quote. Compare a few insurance providers before making a decision. You’re going to want to work with a reputable insurance provider who offers favorable terms.

Ensure you bring a copy of your general liability, commercial car insurance, and other liability policies. Determine the coverage for each policy, so you get an accurate quote.

Keep Your Business Protected at All Times

Running a business involves many expenses. Thus, getting a commercial umbrella policy on top of your other policies can seem expensive at first. However, once you consider the benefits of this type of coverage, you’ll discover that it far outweighs the costs.

Don’t wait until it’s too late to consider the right umbrella insurance policy for your business. Contact us today and safeguard your business immediately.