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Crack the code for commercial umbrellas



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Many in the insurance industry will agree that umbrellas are one of the most misunderstood types of insurance coverage available. Of course, it is easy to understand why when you look up the definition of "umbrella" and get explanations that include:

  • "Something that covers or encompasses a wide range of elements or factors" 1
  • "Something that gives protection ” 1
  • “ A thing that contains or contains many different elements or parts ” 2

I have had customers and prospects over the years who believed that umbrellas provide some form of felt protection of property over their commercial property, equipment and cars.I have told others that it provided a kind of protection for personal responsibility for individuals who are entrepreneurs and can be sued – either personally or professionally – for pretty much anything.

With this in mind , what in the world makes a commercial umbrella cover?

Short version (but maybe still a bit confusing version): Commercial umbrella policies are surplus liability insurance that provides an additional more stockpiles of liability protection in the event of a large claim pulling out the insurance limits on an underlying policy.

Longer version (and hopefully clearer version): As a business owner, you probably have several forms of liability insurance. You probably have general liability insurance, which protects your company against claims due to personal injury, property damage, personal and advertising damage and product liability. You can also have a liability insurance that covers you and / or your drivers while they use vehicles for your company. In addition, you can have other liability insurance, such as professional liability, which handles professional exposures that are not covered by general liability insurance, or employer liability, which covers work-related injuries that are not covered by workers' compensation insurance.

Let's say you have a major claim, such as a car accident that results in multiple injuries or even a death. If you have a $ 1,000,000 car insurance liability limit but the total damage is $ 1,500,000, what happens? Answer: Your company is responsible for the difference of $ 500,000 when the insurance ends.

This is where a commercial umbrella policy comes into play. For a relatively small premium, you can buy an umbrella policy that covers the damages that exceed all underlying insurance limits (By underlying I mean all insurances that are specifically listed on the umbrella policy to which the umbrella policy applies. If the underlying policy is not listed in the umbrella policy declarations, the umbrella policy declarations will not apply. for it.)

The umbrella policy has limits starting at $ 1,000,000 – and increasing in million dollars steps from there – so you may want to consider an umbrella of $ 2,000,000, $ 5,000,000 or even higher depending on what exposures your company faces.

Talk to your local independent insurance agent to learn more, as the umbrella you have in your golf bag should not be the only one that protects you when you get caught!

1 https://www.merriam-webster.com/diktion/umbrella?src=search-dict-hed

2 https: //www.le xico.com/en/definition/umbrellaebrit19659008achte Chapter19459012 ?? The information above is of a general nature and your policy and coverage provided may differ from the examples provided. Please read your policy in full to determine your available coverage.

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