What Is Commercial Umbrella Insurance?

What is Commercial Umbrella Insurance?

Commercial umbrella insurance provides additional liability coverage beyond the limits of other insurance policies, such as general liability, commercial auto liability, and employer's liability insurance. As a result, commercial umbrella insurance protects businesses from catastrophic losses resulting from lawsuits and claims that exceed the limits of their underlying liability insurance policies.

 

How Does Commercial Umbrella Insurance Work?

Commercial umbrella insurance kicks in when the limits of other underlying liability insurance policies coverage are exhausted. For example, if a business has a general liability insurance policy with a limit of $1 million and is sued for $1.5 million, the commercial umbrella insurance policy will cover the remaining $500,000. Commercial umbrella insurance policies typically have high limits, ranging from $1 million to $10 million or more.

 

Benefits of Commercial Umbrella Insurance

Commercial umbrella insurance provides several benefits to businesses, including:

 

1. Additional Protection

Commercial umbrella insurance provides an additional layer of liability protection for businesses that face large claims and lawsuits. Without commercial umbrella insurance, a business could be forced to pay for damages that exceed the limits of its underlying liability insurance policies, which could result in financial ruin.

 

2. Cost-Effective Coverage

Commercial umbrella insurance is a cost-effective way for businesses to increase their liability coverage. Commercial umbrella insurance policies are very cost-effective, and by purchasing a commercial umbrella insurance policy, businesses can get high levels of coverage at a relatively low cost.

 

3. Peace of Mind

Commercial umbrella insurance provides peace of mind to business owners by knowing they have an additional layer of liability insurance protection in case of large claims and lawsuits.

 

How much commercial umbrella insurance coverage do I need?

 

The amount of commercial umbrella insurance coverage you need depends on several factors, such as the size of your business, the level of risk exposure, and the assets you want to protect. It's essential to have enough coverage to protect your business from catastrophic losses that may exceed the limits of your general liability insurance policy.

 

Additionally, the type of business that you operate will determine the amount of commercial umbrella insurance coverage you need. For example, a business that operates in a high-risk industry, such as construction or manufacturing, will require more coverage than a business that operates in a low-risk industry, such as retail or consulting.

 

To determine how much coverage you need, you should consider your total assets, including property, investments, and future earnings. You should also consider the level of risk exposure in your industry and the likelihood of facing lawsuits or other high-cost claims.

 

A good rule of thumb is to have enough commercial umbrella insurance coverage to protect your total assets. For example, if your business has $1 million in assets, consider a commercial umbrella insurance policy with a minimum of $1 million in coverage.

 

It's also important to review your coverage limits regularly and adjust them as needed. As your business grows and changes, your insurance needs may also change.

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How Much Does Commercial Umbrella Insurance Cost?

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The cost of commercial umbrella insurance depends on several factors, including the amount of coverage you need, the type of business you operate, and the level of risk exposure your business faces. Generally, the cost of commercial umbrella insurance is relatively low compared to the amount of coverage that you get.

 

What is the difference between general liability and commercial umbrella insurance?

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General liability insurance is a type of insurance that covers your business in case of third-party claims, such as bodily injury or property damage. It is designed to protect your business from the costs associated with lawsuits, including legal fees, settlements, and judgments.

 

Commercial umbrella insurance, on the other hand, provides additional liability coverage that goes beyond the limits of your general liability insurance policy. It is designed to protect your business in case of catastrophic losses that exceed the limits of your general liability policy.

 

The main difference between the two is the level of coverage they provide. General liability insurance provides coverage up to a certain limit, whereas commercial umbrella insurance provides liability coverage beyond that limit. Commercial umbrella insurance is typically used to cover high-cost claims, such as lawsuits involving multiple parties or catastrophic losses that result in significant damages.

 

The Bottom Line:

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The Overmyer Insurance Agency can help you determine if you need commercial umbrella insurance coverage, how much coverage you need, and how much the coverage costs.  

 

Commercial umbrella insurance provides a layer of liability coverage for businesses to protect against large claims and lawsuits that exceed the limits of their underlying insurance policies. The amount of coverage that a business needs depends on several factors, including the type of business, the size of the business, and the level of risk exposure. The cost of commercial umbrella insurance is relatively low compared to the amount of coverage you get, making it a cost-effective way to increase.

 

80% of businesses are paying too much for insufficient insurance coverage. We solve this by partnering you with the right insurance company and coverage options unique to your business. The Overmyer Insurance Agency helps businesses make better decisions when it comes to their insurance needs. If you want a commercial umbrella quote or a coverage review, we are here to help, and just a call or click away.

 

FAQ

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1. How much umbrella insurance coverage do I need?

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The amount of umbrella insurance coverage you need depends on several factors, including the type of business you operate, the size of your business, and the level of risk exposure. However, a general rule of thumb is to have enough coverage to protect your assets and avoid financial ruin in the event of a catastrophic loss.

 

2. How much does commercial umbrella insurance cost?

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Commercial umbrella insurance costs vary depending on several factors, such as the amount of coverage you need, the type of business you operate, and the level of risk exposure. Typically, the cost of commercial umbrella insurance is relatively low compared to the amount of coverage you get.

 

3. Does commercial umbrella insurance cover all types of claims?

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Commercial umbrella insurance provides an additional layer of liability coverage for businesses but may not cover all types of claims. For example, some policies may have exclusions for intentional acts or criminal behavior.

 

4. Is commercial umbrella insurance necessary for small businesses?

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Commercial umbrella insurance is not required by law, but it is a good idea for small businesses that want to protect their assets and avoid financial ruin in case of a catastrophic loss.

 

5. How do I know if I need commercial umbrella insurance?

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If your business faces a high level of risk exposure or operates in a high-risk industry, such as construction or manufacturing, you may need commercial umbrella insurance. It's best to speak with an insurance agent to determine if commercial umbrella insurance is necessary for your business.

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