There is a misconception that only large companies or corporations need umbrella insurance, that the coverage is expensive and may be unnecessary. On the contrary, an umbrella policy is a vital piece of coverage that can protect you and your business from losses that exceed your primary policy limits.
The truth is you don’t have to have a million dollars to be sued for a million dollars. It can happen quickly, and your livelihood could be greatly affected.
Costs for an automobile accident with property damage or serious injuries to multiple people could easily exceed a standard insurance policy limit, leaving you or your business to pay out of pocket if you are found to be legally liable. Injuries due to work you performed or because of a product you distributed or manufactured also could result in lawsuits that could put your business in jeopardy and potentially your personal assets as well.
An umbrella policy provides limits in excess of your primary liability policies and adds that extra layer of protection and peace of mind. The value in this “extra” layer of protection does not stop there. Not all umbrella policies are the same. Ask your independent insurance agent to place your insurance with a company whose policy provides:
- No self-insured retention (similar to a deductible). Some insurance companies may require you to retain liability and pay the first $10,000, $15,000 or sometimes $25,000 for specific claims covered by the umbrella that were not covered by the primary liability policies. Ask your agent for a policy that eliminates this requirement
- Unlimited defense payments. Some umbrella policies offer you true unlimited defense payments when your primary liability policy limits have been exhausted.
- Coverage for items not covered in your underlying policy. Some umbrellas will provide “first dollar drop down” coverages for specific situations, meaning that if your underlying primary policies do not cover a loss, your umbrella might.
Not all umbrella policies are the same. Look for an insurer that can provide an umbrella policy with your commercial insurance package. Having all your insurance with one company, in one package, is easier to manage.
Additionally, an umbrella policy may help your company have a competitive advantage when bidding on a contract as you will already have the required “extra” insurance in place.
Managing these liability exposures makes financial sense, no matter how big or small your business.
Coverages described here are in the most general terms and are subject to actual policy conditions and exclusions. For actual coverage wording, conditions and exclusions, refer to the policy or contact your independent agent.