Business umbrella insurance provides an additional protection layer for companies. It’s a supplement to other insurance policies and can help companies protect themselves from catastrophic losses. The term “umbrella” might make it seem like this business umbrella insurance provides coverage for all business aspects.
This is the most common misconception. It is still necessary to have other insurance policies like general liability insurance, auto insurance, and employer’s liability insurance, to mention a few.
Who Should Get Business Umbrella Insurance?
Every business can profit from umbrella insurance for businesses. However, certain businesses are more at risk than others. If one of the following is true for your company, the business umbrella policy is a must.
Your commercial property is accessible to the public. Allowing other people to visit your property exposes you to risks. If someone gets injured while on your property, or if an employee behaves improperly or is a victim of a crime, the lawsuits that result can quickly exhaust the general liability insurance.
You or your employees work on the property of others. Working on property belonging to others can increase the risk for your company. Accidental property damage could cause costly legal proceedings.
There is a contractual obligation to purchase business umbrella insurance. Government contracts typically require this. It protects your business and your customer in the case of a lawsuit. Your company is at high risk of being sued.
This is the case for a lot of companies. The only ones likely to require business umbrella insurance are sole proprietorships based at home that have no employees, no subcontractors, and no direct contact with customers. If this is your business, you should consider the chance of being involved in legal proceedings before deciding not to purchase this additional insurance.
What Exactly Does Business Umbrella Insurance Cover?
The number of claims is beyond the limit of the policies you have in place. For instance, your company’s auto insurance policy will cover $1 million for bodily injuries; however, your company is sued for $3,000,000. An umbrella policy for business insurance can be used to cover the difference of $2 million.
Limitations on claims that exceed the aggregate of your policies. It is possible not to go over your insurance policy limits by submitting a single claim. Smaller claims may exceed the limits of your insurance policy.
Business umbrella insurance is added when the policies that underpin it have been exhausted. Any claims are not protected by the underpinning policies.
For instance, business general liability insurance typically covers equipment that you own. If you lease other equipment and the equipment gets damaged, your company would be responsible for the damage unless you have umbrella insurance.
How Does Business Umbrella Insurance Work?
Business umbrella insurance covers your coverage under a “follow form” basis. It is necessary to exhaust your existing coverage prior to utilizing the business umbrella insurance. One instance of how business umbrella insurance is if a customer gets injured on your business property.
The customer files a lawsuit against you for $10 million and the judge awards them $6 million. Your general liability insurance policy’s limit is $5 million.
If you have an umbrella with a $1 million insurance policy for your business. General liability insurance will pay five million dollars to a customer who has been injured. You then claim your umbrella insurance provider for your business, covering $1 million.
What Is The Best Way To Purchase It?
Many insurance companies offer discounts on insurance bundles, and it is worthwhile to begin an inquiry with your current insurance provider. It’s also simpler to work with one company when you need to make an insurance claim.
Many business insurance providers provide umbrella policies for businesses. The most efficient way to compare coverage is to use the online insurance marketplace to compare quotes from various companies at once.