Business umbrella insurance is a type of liability insurance that provides extra coverage above and beyond the limits of your other business liability policies. It can help protect your business from financial losses resulting from lawsuits, such as those alleging bodily injury, property damage, or personal and advertising injury.
Umbrella insurance is not a standalone policy. It must be purchased in addition to other liability policies, such as commercial general liability (CGL), commercial auto liability, and employer's liability insurance.
How does umbrella insurance work?
Umbrella insurance kicks in when the limits of your other liability policies have been exhausted. For example, if you have a $1 million CGL policy and are sued for $2 million, your umbrella policy could pay for the remaining $1 million.
Umbrella insurance can also cover certain types of liability that are not covered by your other liability policies, such as:
- Punitive damages
- Wrongful death
- Environmental liability
- Sexual harassment
- Discrimination
What are the benefits of business umbrella insurance?
There are several benefits to having business umbrella insurance, including:
- Financial protection: Umbrella insurance can help protect your business from financial ruin in the event of a costly lawsuit.
- Peace of mind: Umbrella insurance can give you peace of mind knowing that your business is financially protected, even if you are sued for a large amount of money.
- Flexibility: Umbrella insurance can be tailored to meet the specific needs of your business.
How much umbrella insurance do you need?
The amount of umbrella insurance you need will depend on a number of factors, including the size and type of your business, the industry you are in, and your risk exposure.
A good rule of thumb is to purchase an umbrella policy that provides at least $1 million in additional coverage above and beyond the limits of your other liability policies. However, you may need more coverage if your business is at high risk of being sued, such as if you provide professional services or have a lot of customer contact.
If you are considering purchasing business umbrella insurance, be sure to let us know.