Commercial Umbrella Insurance for Your Business: Why Do You Need It?
Commercial insurance is important, as it protects businesses from perils such as theft, lawsuits, employee injuries, and property damage. Unfortunately, about 75% of U.S. businesses are underinsured. This means that in the event of a disaster, the owners of such businesses would have to pay for a portion of the resulting damages out of pocket. This ultimately could deplete their business resources.
Thankfully, a commercial umbrella insurance policy can protect your business by providing additional liability coverage. Below is more detailed information about commercial umbrella insurance and why you need it for your business.
Does My Business Need Umbrella Insurance?
Regardless of the safety measures you already have in place, accidents are inevitable. Workplace accidents can lead to expensive liability claims, particularly when they result in third-party property damage or bodily injures. Instead of putting your business in jeopardy by ignoring such possibilities, you should purchase the right umbrella insurance policy irrespective of the size of your business.
In fact, you should carry commercial umbrella insurance if:
- You have gaps in your primary liability insurance coverages
- You have clients and other third-parties visiting your premises regularly
- You run a construction/contractor business
- Your employees use their personal vehicles for business activities
- You intend to increase your liability coverage without hiking premiums on your primary liability policies
What Does a Commercial Umbrella Policy Cover?
Like primary liability insurance, commercial umbrella insurance covers the legal expenses, claims, and medical costs incurred when a third party gets injured on your premises. However, it only covers the amount that remains after you exhaust your primary liability coverage. For instance, if your primary liability coverage limit is $1 million and a third-party sues your business for personal injuries and wins $1.5 million in damages, you would need the umbrella insurance to cover the remaining $500k, thus protecting your personal and business’s assets.
Commercial Umbrella Policy Exclusions
While commercial umbrella insurance fills the gaps in your liability coverage, it has exclusions that include, among others:
- Errors and omissions liability
- Employment practices lawsuits
- Malpractice lawsuits
- Intentional acts
Additionally, umbrella insurance provides liability coverage only if you have exhausted the limits on your primary liability policies.
How Much Coverage Does My Business Need?
Typically, insurance companies provide commercial umbrella insurance in $1 million worth of increments. This means that the minimum amount of umbrella insurance you can purchase for your business is $1 million. Even so, you can carry a higher limit depending on the size of the gap in your primary liability policies, as well as the nature of your business operations.
For example, if your business involves coming into contact with the public on many occasions, consider purchasing a higher limit of umbrella insurance.
Additionally, if you run a risky business such as a construction enterprise, you should also purchase enough commercial umbrella insurance to shield your business in case a client or independent contractor gets injured at the construction site.
That’s how commercial umbrella insurance can help protect your business. If you have any questions about commercial insurance, the experts here at Modab Insurance Services will assist you. Contact us today to learn more.