Commercial Umbrella Insurance Coverage Basics

Commercial Umbrella Insurance Coverage is designed to provide protection against any catastrophic losses.  It serves three purposes:

  • To provide excess limits when the limits of underlying liability policies are exhausted by the payment of claims
  • To drop down and pick up where the underlying policy leaves of when the aggregate limit of the underlying policy in questions is exhausted by the payment of claims
  • To provide protection against some claims not covered by the underlying policies

Any claims beyond those covered in the underlying policy a client would need to pay a self-insured retention (SIR). This is the amount of money that is paid before the insurance company responds to the loss.

What’s The Difference Between Liability & Commercial Umbrella Insurance Coverage For Businesses?

Commercial Umbrella Insurance is written over primary liability insurance like commercial general liability policy (CGL). CGL is a standard insurance policy that protects a business and its employees against liability claims for bodily injury (sickness, disease, death and even emotional or mental injuries), property damage, and personal and advertising injury (slander and false advertising). Two coverage options are:

  • Premises/Operations which pay for any damages (property or bodily injury) that occurs on the premises or as a result of the business.
  • Products/completed operations pay for damages (property or bodily injury) that may occur away from the premises of the business but many be caused by the businesses products or completed work.

The Importance Of Umbrella Insurance Coverage For A Commercial Establishment

For business who are at a higher risk for lawsuits, legal fees, and settlements commercial umbrella insurance is typically needed. Some popular examples are dental practices, chiropractors, tech & security offices, veterinary clinics, and much more. The importance of this insurance is to provide protection against unusually high losses, especially if they exceed other liability coverage limits, such as the general liability. It also protects a business from any gaps in existing coverage or any exclusions written in the primary liability policy. As well as, protect for a business’s assets from liquidation.

A loss is eligible when it is only partially covered or not covered at all by an underlying insurance. When this occurs the insurer has the right to defend any lawsuit that is against them. It also permits an investigation of any loss and can settle any claim or lawsuit. If you paid any out-of-pocket costs on behalf of your own legal defense for claims that you are not insured for or do not have business liability insurance, “first-dollar defense” will reimburse you for any of those expenses.

How Much Commercial Umbrella Insurance Should I Carry?

Several factors are based on this decision:

  • The type of business owned
  • The amount and types of assets of the business
  • Other coverages the business already has in place
    • Most umbrella policies require a business to possess minimum primary limits

Standard coverage takes care of most situations that a business might be in. However, it still is crucial to protect the assets and the well-being of a business. It is important to keep in mind that lawyers typically aim for a business’s available assets.

Looking into Commercial Umbrella Insurance Coverage for your Business?

At Compass Insurance Agency, we work with over a dozen insurance firms to provide you with the answers to all of you questions about umbrella insurance. We also will help you to achieve the most affordable coverage options for your business. Just click a link below or call.

 

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