What is Commercial Umbrella Insurance?
What does Commercial Umbrella Insurance cover?
- A customer slips on a wet floor in your office and injures himself. The medical costs of the injuries exceed your general liability policy’s limits.
- An advertising error results in major lawsuits against your business with costs that exceed your primary business liability insurance coverage limits.
Commercial Umbrella Insurance can be applied when a covered claim exceeds the limits of an eligible liability policy. Say your policy has already paid out $1 million for a claim, and that’s as much coverage as the policy can offer. However, you’re still liable for another $250,000. Your Commercial Umbrella policy can cover the remaining cost.
But this doesn’t mean you can put your Commercial Umbrella coverage toward every type of insurance policy. Just like a real umbrella, Commercial Umbrella Insurance can only cover a certain area. There are three underlying liability policies that fall under the protection of this policy:
- General Liability Insurance.
- Employer’s Liability Insurance.
- Hired and Non-Owned Auto Liability Insurance.
This is important to keep in mind if you’re thinking about purchasing a Commercial Umbrella policy. Umbrella Insurance can only be applied to a claim if…
- You have the appropriate underlying policy.
- That policy’s limits have been reached.
Additionally, be aware that you might not be able to purchase a Commercial Umbrella policy unless the underlying policy has a certain limit.
To illustrate how Commercial Umbrella Insurance works, consider this scenario: a few visitors are injured on your business property. They all require trips to the hospital and expensive surgeries. They sue your business to recoup medical expenses and other damages. Luckily, you have General Liability Insurance and Commercial Umbrella Insurance.
Sure enough, your General Liability policy exceeds its $1 million limit after all the attorney fees, settlement expenses, and court costs are tallied. But you have Commercial Umbrella Insurance, which provides another $1 million in coverage. After your General Liability policy is exhausted, your Umbrella coverage takes care of the remaining expenses.