What Is Commercial Umbrella Insurance?
As lawsuits become more and more prevalent in our society, business owners need to be asking themselves not if they are going to be sued, but when? More importantly, do I have a sufficient amount of coverage to fight off the cost of defending my business?
Liability insurance excites to indemnify your business in the event that you do face a lawsuit. Even if you’ve done nothing wrong, you still have a duty to defend because the plaintiff perceives your actions or non-action as negligent. The liability policy you most likely have is known as your primary policy. But what if your business is liable for an extremely calamitous event or your defence costs of lawsuit exceed your primary limits? That’s what umbrella insurance solves.
Umbrella insurance is a excess or secondary form of insurance, that requires a primary policy, or an underlying liability policy to first pay out on a claim before your umbrella policy takes effect.
An umbrella affords critical coverage against very large lawsuits that could cripple your business. Before purchasing a policy, however, there are a couple of things things you should consider:
Limits
This coverage is most effective when it’s tailored to the nature of your business. A gas dealer and a contractor may need more coverage than a bakery or small retail store.
Coverages
The policy should provide coverages that are not afforded by your underlying liability policy.
Cost
Umbrella policies are not one size fits all. Umbrella premiums vary depending on the carrier, the limits, and the coverages you purchase.
Policy Period
Lastly, your umbrella policy should start and end on the same dates as your underlying policies. Effective dates are imperative because many umbrellas limit coverage to injuries or damage that occur during the policy period of the umbrella. Issues can arise when the dates don’t match
Ultimately, this product exists to make sure the full picture of your assets are represented in your coverage and that you are fully covered in the correct way. It takes a skilled and experienced broker to make sure you’re fully covered without any gaps that could come in to quickly destroy what has taken you a long time to build.