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Commercial Umbrella Insurance: Should Your Business Have It?

If your business owns a large number of assets, you should consider getting commercial umbrella insurance. If your business maxes out its general liability coverage, umbrella insurance provides additional coverage for predetermined liability risk. And, one of the most common risks to your general liability is property assets. 

So, does your business present the level of liability that requires extra protection? Learn everything you need to know about commercial umbrella coverage for your business. Find out what it covers and when this coverage kicks-in. And, see if your business presents the kind of risk that is well-served by having umbrella coverage.

Commercial umbrella insurance is good to have if you have assets. The regular liability on your policy is usually enough, but bad things happen.

Commercial Umbrella Insurance: What is It and How Does it Work?

Commercial umbrella insurance is designed for liability coverage over that of your general liability coverage. It is especially useful for businesses at high risk of litigation, and those with a large volume of property assets. But, to acquire umbrella coverage, your business needs underlying coverage, as well. 

The nature of your business activities and assets determine its need for extra umbrella coverage. Some coverage providers require different levels of underlying coverage before an umbrella policy pays out. The underlying requirements almost always include general liability insurance and can include workers’ compensation coverage, commercial auto liability coverage, and other forms of coverage. 

How Does Umbrella Coverage Work?

Commercial umbrella coverage works by paying-out when your business’s underlying coverage runs-out. In this way, it is almost identical to personal umbrella coverage, which increases the coverage you receive in your home, renters, and auto insurance. But, commercial umbrella policies increase the amount covered in your underlying policies, for things like legal fees, costs of damages occurred, and medical bills.

What is Covered Under a Commercial Umbrella Policy?

A personal umbrella insurance policy extends the coverage in your underlying policies, but businesses present a different risk to insurance companies than that of individual homeowners. So, commercial umbrella policies provide extra coverage on specific types of liability. And, even umbrella policies can only offer coverage up to a point. 

In general, commercial umbrella policies extend a business coverage on certain types of liability, from $1 million to $2 million on top of your underlying coverage. So, if your liability exceeds your umbrella coverage limits of between one or two million dollars, you’re on your own.

As stated above, umbrella coverage does not cover every claim, across the board. Instead, it provides specific coverage on some of your existing liability covered under your general liability policy. Take the examples of a snow-plow driver versus a real-estate lawyer:

One day, the snow-plow driver is in a hurry to get home, so they forget to finish plowing a portion of their route. Someone slips falls and sues the snow-plow company for liability over the companies general liability coverage limits. In this case, umbrella coverage kicks-in to cover the additional damages that exceed the general liability. 

The real-estate lawyer, on the other hand, makes a mistake in an audit that values a property at $500,000, instead of $1 million, resulting in a liability lawsuit. If the lawyer’s professional liability insurance is exceeded by the cost of damages that occurred, umbrella insurance does not cover the balance. In this case, the law firm requires Errors & Omissions (E&O) insurance.

Does Your Business Need Commercial Umbrella Coverage?

How efficacious it is for your business to purchase commercial umbrella insurance is dependent on the level of liability risk inherent in your business’s activities. As a general rule-of-thumb, there is a high risk if your business engages in a high amount of interactions with customers or clients. The highest risk is reserved for businesses that engage in using heavy machinery and hazardous equipment – especially in dangerous environments, like deep-water drilling.

The more people that interact with your business, the more liability risk your business presents to an insurance company. Therefore, umbrella insurance can help in the event your general liability policy coverage is exceeded by the costs of damages that occurred. In the same way, it can help if your business operates on a property that is owned by a third party, like a landlord.

Retail stores, restaurants, industrial manufacturing facilities, and hotels present the most risk because of the high levels of customer interactions, and high-risk associated with the nature of the work.

Does your business present a high enough risk to validate getting commercial umbrella insurance? Talk to an insurance specialist today for a free consultation and liability risk assessment. 

Filed Under: Uncategorized Tagged With: business insurance, commercial insurance, umbrella insurance

What is Commercial Insurance and Does Your Business Need It?

You know that health insurance, car insurance, and life insurance is important to you – personally. But, can you say the same for your business? If the answer is anything, but a resounding ‘yes’, it’s time you should be asking, “what is commercial insurance and what should I know about the coverage policies available?”

In this article, you learn everything you need to know about commercial insurance policies and the options available to small business owners. Discover the many liability issues that exist for businesses in the event they are not covered by a commercial policy, and which policy options your business needs. 

What is Commercial Insurance? The Small Business Guide for 2020

The smaller your business, the easier it is to put off the need to cover your business with commercial insurance. No matter how large or small the operation – if you own a business, you need commercial insurance. So, what is commercial insurance, and why is it so important for your business to have it?

Commercial coverage insures your business against a wide variety of risks associated with your day-to-day operations. Business policies are designed to provide coverage to the business, employee workforce, and owners. If you own a business without commercial coverage, all of the risk and liability falls on your personal insurance. 

It only takes one incident to financially destroy, not only your business, but your personal finance, credit, and more. Without business insurance all of the risks fall on your shoulders, placing you at direct risk for personal bankruptcy in the event of an unfortunate and unforeseen business-related accident. 

Unlike personal insurance plans, there is no ‘one-size-fits-all’ solution when it comes to business. Commercial business insurance is like an al-a-carte menu. You only pick the coverage options that your business needs. 

General Liability Insurance

Liability insurance is the bedrock of every business’s coverage, by protecting your business from going-under from legal fees and settlements. If your business is responsible for the injury or harm of an employee or bystander, liability insurance provides coverage for legal fees and litigation costs. 

Errors and Omissions Insurance

General liability insurance, however, does not cover legal fees associated with clients suing your business for harm or damages rendered through professional services. If you are sued for something that happens in the course of your professional service, you need professional liability, or Errors and Omissions insurance. 

Worker’s Compensation Insurance

Each state has different laws regarding workers’ compensation insurance. Even so, in all 50 states, every business has to offer some degree of coverage to employees in the event of an on-the-job accident. Also, by providing workers compensation, employees are contractually prohibited by law from suing your business for injuries sustained while on the job. 

Commercial Automotive Coverage

If your business involves a vehicle fleet of 10 or more vehicles, commercial auto insurance is essential. The same logic applies, for a business’s fleet of vehicles, as for your own personal car insurance. It protects you from paying the entire cost out-of-pocket for injuries or property damage sustained by anyone involved in an accident with the business’s fleet vehicles during business operations. 

Data Breach Insurance

Small businesses are one of the biggest targets of online theft. Most business owners assume that they are not a big enough fish to be targeted by thieves. In fact, small businesses are, often, the easy and profitable targets. When it comes to cybercrime, a single incident can bankrupt your entire business. 

Almost every business in the world stores important business information, client data, and sensitive financial records on dedicated servers. No matter how and where your business chooses to store its digital assets, data breach insurance provides vital coverage in the event of loss due to theft.

Business Owner’s Insurance Policy (BOP)

A business owner’s policy provides property coverage, liability, and legal protections from any lawsuits by employees or clients. Since, as a business owner, the ‘buck stops with you,’ a BOP provides much-needed protection. After all, just because the boss has to take responsibility, doesn’t mean everything is your fault, so a BOP offers coverage for the events that business owners can’t predict. 

Commercial Property Insurance

Even as many businesses move more and more operations to digital platforms, the essential things still require physical infrastructure, equipment, and inventory. Regardless of the size of your facility, equipment, or throughput, commercial property insurance protects the nuts-and-bolts of your business. Property insurance policies cover financial losses associated with theft, fire, smoke damage, natural disasters, and vandalism to which the business property falls victim. 

How to Find the Best Commercial Plan for Your Business

The question, “what is commercial insurance?” is answered by the needs of your commercial business activity. Some businesses need a policy that includes coverage for all of the above options, while others only require two or three. For detailed information on a policy that works for your business, contact a commercial insurance specialist.

Filed Under: Uncategorized Tagged With: business insurance, commercial insurance

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