What Is a Commercial Umbrella Insurance Policy?

As a business owner, you know that protecting your company from potential risks and liabilities is essential to achieving long-term success. And while you likely have a basic insurance policy in place, unexpected catastrophes can leave you wishing you had an extra cushion—added protection that extends beyond the limits of a standard policy.

This is where commercial umbrella insurance comes into play. Here, we’ll tell you how a commercial umbrella policy works and why it’s essential for business owners.

How Does an Umbrella Policy Work?

Traditional insurance policies typically kick in to cover general liabilities like third-party bodily injury and property damage claims. However, most policies have a cap—a maximum amount the policy will pay for a covered claim.

For example, if your policy has a general liability limit of $1 million and an injured customer sues you for $1.5 million, you may be responsible for paying the remaining balance. Commercial umbrella insurance covers additional costs (up to the limit of your umbrella policy) where traditional policies fall short.

What Does Umbrella Insurance Cover & How Much Does It Cost?

Commercial umbrella insurance typically only covers third-party injuries and property damage claims—not security breaches, professional liability, or commercial property damage.

Costs generally depend on your existing policy’s coverage limit, industry, location, and number of employees. While these policies are usually cost-effective for many businesses, expenses vary greatly. Rest assured, our team is committed to helping you find a custom policy that suits your budget and needs.

How Much Coverage Do You Need?

The coverage you need ultimately depends on your industry, business type, assets, and risk exposure. To determine the appropriate coverage amount, consider the following:

Risks

Every business faces unique risks, and it is essential to assess yours thoroughly. Consider the nature of your industry, products, services, and customers.

For example, contractors and cargo transport businesses often face higher risks of bodily injury or property damage because they rely on heavy equipment. On the other hand, nonprofits may encounter more risks related to contract laws, fiduciary liability, volunteer management, and regulatory compliance.

Existing Policy Coverage

When we work with you to create a commercial umbrella policy, we generally start by looking at your current policy limits. This helps us identify exclusions and gaps. Then we fill them in with an umbrella policy that suits your unique needs.

Assets

Consider the value of your assets, including property, equipment, and inventory. How much could you afford to lose in a lawsuit or unexpected catastrophe? The more assets you have, the more protection you will likely need.

Worst-Case Scenarios

Consider the kinds of catastrophic events most likely to occur within your industry. Next, estimate the potential costs of such an event, including legal fees, settlements, and damages—and how much commercial umbrella insurance you would need to weather the legal storm.

These are only a few factors to consider, of course. Rest assured, we understand that every business is unique, and there is no one-size-fits-all approach to protecting yours. That’s why we take time to learn about your company, assess your specific risks, and recommend customized solutions that align with your goals.

When It Rains Catastrophe, We Help You Weather the Storm

With over 60 years of experience, we understand your business's unique risks and industry-related challenges. We've also helped countless businesses create custom umbrella policies that provide the extra protection they need to weather any storm. Contact us today!