You’ve worked hard to start your business – from putting in long hours to get it off the ground, to working holidays and weekends to make sure it’s a success. Along the way, you’ve probably accrued a staff you look out for, and customers you care about.
With all this responsibility, it stands to reason that you’d want to protect your assets in the event that a problem, whether it’s an accident or a court judgement, arises that goes beyond what your commercial insurance policy can’t cover. This is where commercial umbrella insurance comes in.
What exactly is commercial umbrella insurance?
Commercial umbrella insurance provides extra liability protection for your business. When your organization has reached the liability limit on your commercial general liability, commercial auto liability, employer’s liability, and/or commercial international liability insurance, a commercial umbrella insurance policy can offer additional protection.
Umbrella policies can cover everything from legal expenses to medical bills, to property damage. It can also offer protection against libel, court judgements and settlements. Policy limits range from $1 million to up to $50 million, depending on your organization’s exposures, industry, history, operational reach (i.e. where does your organization conduct business).
How exactly does commercial umbrella insurance work?
Essentially, commercial umbrella insurance policies provide your organization with additional coverage once you’ve reached your commercial liability coverage limit(s). It protects your organization when the unimaginable happens – like a major lawsuit. The traditional occurrence limits offered on commercial general liability, commercial auto liability, employer’s liability, and commercial international liability policies are $1M. Therefore, a commercial umbrella is utilize to “sit over” those underlying policies to provide a greater limit of liability for your organization.
A scenario:
Your organization is sued for $2 million due to an at-fault accident involving one of your organization’s drivers. The court sides against your organization, and you max out your commercial auto liability coverage paying for attorneys, settlements and judgements - all costing around $1.5 million. Umbrella commercial coverage could pay the remaining $500,000. Without this additional coverage, you’d have to use organizational or personal funds. And that could, in turn, jeopardize your organization or personal financial security.
What are some examples of commercial umbrella insurance?
A customer visits your restaurant and slips on the floor where an employee has spilled a drink. The customer sustains injuries and sues the restaurant, claiming that the injuries impacted their capacity to work. They win the case, which cost $2.5 million in legal and medical fees, $1.5 million more than your general liability policy limit. An umbrella policy, however, would cover the remaining $1 million.
Your employee uses the company vehicle and is found at fault for a major accident when driving on the job. The drivers of the other cars sue your organization. While you have a commercial auto insurance policy that will cover up to $1 million in liability, the cost of the lawsuits is $3 million. Again, an umbrella insurance policy would cover the remaining $2 million.
A person outside your organization is injured while using your product and sustained substantial bodily injury and the inability to work. This person sues your organization for $4 million. The case is brought before a jury and your organization is deemed liability. The total lawsuit balloons to $5 million due to the legal fees. While the commercial general liability will cover up to $1 million in liability. Again, a commercial umbrella policy would cover the remaining $4 million.
What commercial umbrella limit should my organization purchase?
At Roehr Insurance, we utilize benchmarking tools that assist organizations in determining what commercial umbrella limit is right for them. Due to recent case law and record setting settlements, the size umbrella limits recommended have increased.
How do I get commercial umbrella insurance for my business?
Contact the team at Roehr Insurance Services Agency to get started. We have decades of experience matching business owners with the best commercial umbrella insurance policies. We are here to protect you, your employees and your assets so that every day is business as usual.
