What is an umbrella liability policy and why do I need one for my business?

A commercial umbrella liability policy is a relatively inexpensive way to purchase higher liability limits for your business.

Any business owner seriously concerned about protecting business assets and earning power should consider a commercial umbrella policy. Accidental tragedies resulting in multi-million dollar lawsuits are far too common to rely solely on the coverages and limits provided in your basic liability policies.

All umbrella policies have three objectives:

  • To provide high limits of liability for any one accident or occurrence, as well as for multiple claims during the policy period. The limit of liability available on an umbrella policy usually starts at $1 million and can go as high as you need. This limit applies as an amount in excess of the limits provided by your general liability, auto liability and employers liability policies and may also apply to claims not covered by one of those policies.
  • To cover claims not covered by another liability policy because of policy exclusions or because the limit on the policy has been used up by previous claims during the policy period.
  • To defend claims not covered by another liability policy.

Umbrella policies are not “standard” and coverages vary widely from one insurance company to another. It’s important to review policy forms carefully to be sure any policy offered meets the three above objectives and is suitable for the liability exposures your business confronts.

Ask your agent for a commercial umbrella quote. You may be surprised how inexpensive it can be to double or triple the liability limits provided by your other policies. You may also want to ask your agent to provide quotes from several companies, along with a review and explanation of any policy exclusions that might preclude coverage for exposures covered by your existing policies.

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