A commercial umbrella insurance policy is needed to protect your business
A million dollars does not go as far as it used to. That is why more and more contracts are looking for you to carry a business umbrella insurance policy.
Requirements from certificate holders for commercial umbrella insurance policies are coming up daily at Huff Insurance.
Client’s that are getting their contracts renewed are finding out that the insurance requirements have increased. And now they are looking for them to carry a commercial umbrella insurance policy.
Why? Well the answer is simple, the million dollar limit that you have on your business auto insurance and business liability insurance coverage does not go as far as it used to. It was rare to see a claim exceed $1,000,000 in judgements, but today it is a daily occurrence.
We have all seen the lawyers who pay for the television ads. They claim to get their clients the most money from businesses that they say wronged their clients. And they advise their clients not to talk to the big bad insurance companies. Every time I see one of these commercials, it reminds me of why we have our commercial umbrella insurance in place at Huff Insurance.
What is a business umbrella insurance policy?
A business umbrella policy covers your business with additional liability insurance coverage. This is to help protect you not having enough coverage to handle a loss when it is presented. Your business assets are at risk when your business becomes the target of a lawsuit.
A Commercial umbrella policy extends your coverage by providing an additional layer of liability protection to protect your business. A commercial umbrella goes on top of the underlying policies. Such as general liability insurance, commercial auto liability insurance and employer’s liability insurance to name a few.
Let’s say a customer slips on the wet floor in your office and hurts their back. The medical costs of the injuries exceed your general liability coverage limits. Then what?
- You would either have to pay the additional costs out of your pocket.
- Or you could have an umbrella insurance policy to provide you with an additional layer of protection.
Most carriers offer umbrella policies in the amount of $1-5 million. But limits of $10 million or even $25 million are not unheard of for a small business.
The umbrella is an additional layer and not the primary insurance. Therefore, the cost for the additional levels is not as much as you would think. As you increase, each million costs a little less than the million before.
One thing to keep in mind with a business umbrella insurance policy. In order for the carrier to provide the additional layer of protection, most carriers also want to write the underlying or primary layers for the general liability, commercial auto and employer’s liability.
There are a few reasons for this:
- Insurance companies want to know what forms and endorsements are on the underlying policies. They need to be sure that the policies meet their requirements. They need to know of any unusual exclusions or limitations on the coverage where the umbrella might have to step into the primary position.
- The rate for the umbrella is based on the rates for the underlying policies. So if the carrier writes the underlying coverage, then they will know the pricing on the policy. A good reason to have all of your policies with the same insurance company.
- They want to be sure that the underlying policies are in effect. That they have not been cancelled for nonpayment or other reason. This would cause a big gap in the umbrella insurance protection.
- As the exposures change for the vehicles, payroll, cost of subcontractors, claims, etc. The carrier wants to be made aware to be sure that the umbrella based on the appropriate premium.
If you have your business insurance coverage helter skeltor all over the place, then you may not be able to get an umbrella policy.
There are specialty companies that can write an umbrella without having the supporting coverage but they generally cost more than a carrier that has the underlying coverage would charge.
Make sure that you review your contracts prior to signing them. More and more contracts have a commercial umbrella or excess liability insurance requirement in them.
Give our team here at Huff Insurance a call to discuss your business umbrella insurance requirements. We can discuss the cost for the umbrella before you sign your next contract.
The umbrella carrier will require that you have a minimum standard limit of coverage on your underlying insurance policies to even qualify for the umbrella policy.
Generally they require:
- $1,000,000 General Liability each occurrence
- $2,000,000 General Liability aggregate
- $1,000,000 Commercial Auto Liability
- $500,000/$500,000/$500,000 Employers’ Liability limits (This coverage can be found as part of your workers compensation insurance policy)
Huff Insurance is here to help you put together a comprehensive plan for your business coverage. We want to protect your business from devastating lawsuits.
Request a quote with the form on this page or call us today at 410-647-111
