Any line of business that you choose can undergo various forms of risk, and being sued by any party is a distinct and unpleasant possibility. Some of these situations arise if someone slips and falls on your business property, or you could accidentally damage a customer’s property during work. The presence of a liability policy can help cover costs that these lawsuits incur, but as with any type, there are limits. 

Commercial Umbrella Insurance Defined:

Commercial umbrella insurance provides a heightened level of coverage to your business liability policies. Just to clear the starting line in any business endeavor, most owners have commercial general liability insurance either on their own or as a component of their business owners policy. Since all policies have a financial limit, you may encounter a claim that exceeds that limit, and this is when the commercial umbrella insurance will kick in for appropriate payment. 

Is A Commercial Umbrella Policy Practical For My Business?

The best way we help people evaluate this question here at Alexander Insurance Agency is by closely evaluating the risks your business faces vs what you would be spending on the policy. We will provide you with a plan that is tailored for the challenges you face, and fine-tune the coverage that will work best for your line of business for peace of mind. 

The Items Covered Under Umbrella Insurance:

Every policy has its different forms of coverage, so it’s important to spend a fair amount of time to assure that you are making the correct decision. Some policies do more than just up your coverage amount, and will also provide additional benefits such as reimbursing you for deductibles that your policy dictates. Here are some of the different types of policies that will be extended under the guise of commercial umbrella insurance:

  • Commercial General Liability: This coverage will compensate for bodily injury, property damage, and personal and advertising injury liability insurance. 
  • Commercial Auto Insurance: In every single state, auto liability insurance is required to operate, period. This coverage assists with the payment for injuries and damage to anyone if you or any of your employees is ruled to be at fault in the event of an accident.
  • Professional Liability: This variety of coverage helps to pay for the sometimes necessary expense of legal representation for protection. It will also assist with settlements and awards if any party files a suit against you for professional negligence. 
  • Employment Practices Liability: This insurance pays out for legal defense costs, awards, and settlements that can arise with issues regarding those you employ. Sexual harassment, wrongful termination, and failure to promote are some of the situations that arise, even under the protection of a right to work state. 

Occurrences Not Covered With an Umbrella Policy’s Provisions:

An umbrella policy’s primary function is to work in alignment with liability policies. Some things that are not covered are claims from other types of policies, such as commercial property insurance. If you have a set limit on your commercial property insurance and an arson event happens next door, you would still be responsible for paying the difference as it is not covered under the provisions of your umbrella policy. Umbrella insurance is usually not compatible with worker’s comp issues, property insurance, or business auto coverage. 

Is Umbrella Insurance Categorized as A Business Expense? 

The IRS is always the best and most accurate source for this question, as they are the “judge and jury” for quarterly or annual filings. You generally CAN deduct this cost as a business expense, but an accountant is always the best source of expertise for this issue. 

How Much Does Commercial Umbrella Insurance Cost?

The best commercial insurance option for you is going to vary depending on a few vital factors. Your location plays an important role in your ultimate cost, as  the population base of your state and typical issues regarding commerce come into play. If you are erecting a building’s structure, you will face more risks than a retail outfitter. A general rule of thumb to keep in mind is to expect about $40 per month for each $1 million of additional coverage, which could fluctuate seasonally and due to the changing economic climate. 

Is Commercial Umbrella Insurance Suitable For Me?

Since its cost is relatively low, our seasoned professionals here at Alexander Insurance feel it is a wise choice for many entities. If you find yourself frequently on the road, meet with clients face to face, or visit clients on their private property, It is wise to have as large an amount of coverage as you can. Since your needs are going to frequently change as everything else in this world, it is a good practice to review this need every year. 

Frequently Asked Questions:

Q: Can I buy umbrella insurance separately?

A: You can technically buy this type of coverage on its own, but it may turn out to be limited, and only a few companies can effectively provide them. These policies are designed to provide additional coverage for existing liability policies. If cash is a bit tight, the most feasible decision is to purchase a general liability or BOP and then wait for later to add umbrella coverage when you are financially stable. 

Q: Do we believe that these policies are actually worthwhile?

A: Since the cost is relatively low compared to the benefits you will enjoy, this is an absolutely worthwhile choice for many types of businesses. If you skip this form of coverage you may happily proceed “on the safe side” for quite some time, but if you face a lawsuit, you will be happy that you had this coverage in place for a grave sense of ability to face any challenge. 

Q: How Many Umbrella Policies Can I Possess?

A: You are able to have more than 1 umbrella policy, but they all have different functions. If yo already have commercial general liability coverage for both policies, it works the same way for both. There is only the official need for 1 umbrella policy to provide a coverage enhancement for both your personal and homeowners policies. If you have more than 1 umbrella policy, each one extends itself to a separate category of coverage. 

Here at Alexander Insurance, we will take the time to locate the absolute best coverage for you that will exist as a safeguard in your time of need. If you already have this category of coverage in place, we can assist you with taking inventory and assuring that you are covered with the policy that will allow you to embrace the busiest of seasons with full confidence. We have chosen The Hartford as our carrier for commercial umbrella insurance, after being won over by their 200 years of experience and over 1,000,000 small business owners that have all their faith in them for their daily operational protection!