Commercial Umbrella and Excess Liability Insurance

Commercial insurance policies help to protect your business from various types of risks. Sometimes the limits on your basic commercial policies are not enough to protect your business, though. In those cases where your underlying limits are not sufficient, you can purchase additional coverage in the form of a commercial umbrella policy or an excess liability insurance policy.

If you are found liable for damages above the limits of your underlying policy, your commercial umbrella or excess liability insurance policy can step in to afford additional coverage. For example, if you were found liable for $3 million in damages, but your commercial general liability policy limit is $2 million, your excess liability or commercial umbrella policy could step in to cover the remaining $1 million in damages.

Commercial Umbrella and Excess Liability Insurance Policies – What are They?

The terms commercial umbrella policy and excess liability policy are commonly used interchangeably, but they refer to two different insurance products.

• A commercial umbrella policy is a liability policy that provides coverage when an underlying liability policy has been exhausted. It may be added to many different commercial liability policies, such as your commercial general liability policy, commercial auto policy, or employer’s liability policy. A commercial umbrella policy can fill the gaps left by the primary policy it covers by covering additional risks and increasing limits. Some umbrella policies reimburse deductibles you pay on your underlying policy.
• An excess liability insurance policy is a policy issued to increase the limits of the underlying policy to which it is attached. The excess liability insurance policy carries no new conditions or exclusions and does not broaden the underlying policy – it only expands its limits.

Both the commercial umbrella policy and the excess liability insurance policy kick in when the underlying or basic commercial insurance policy has been exhausted – either when the aggregate limits or the It can be easier than you think to exhaust underlying policy limits with a catastrophic loss.

Who Should Have a Commercial Umbrella and Excess Liability Insurance Policy?

Many different small businesses can benefit from a commercial umbrella and excess liability insurance policy.

Need Higher Limits to Meet Client Requirements: If you are doing a job for a client who requires you to have higher limits in insurance coverage, a commercial umbrella or excess liability policy could be the answer you need. These policies extend your coverage limits by adding a layer on top of your basic underlying policy, which some clients or contracts could require.

Your Business Faces Higher Than Usual Liability Risks: All businesses face some liability risks, but your business may carry higher than normal risks depending on the nature and specific characteristics of your business. One example may be a small business with more foot traffic from passersby than others – this can increase the risk of slip and fall claims and other liability claims being filed against your business.

Higher limits Could Allow you to bid on More Projects: Carrying additional coverage that increases your limits through a commercial umbrella or excess liability insurance policy could allow your business to bid on additional projects or government contracts that require higher coverage limits. With a policy already in place, you may have access to additional bids you could not access before with lower liability limits.

It is often a smart business move to expand your insurance coverage, whether through a commercial umbrella policy to fill gaps in your underlying policy or with an excess liability insurance policy to increase your limits. The additional coverage from a commercial umbrella or excess liability insurance policy can provide critical protection from catastrophic losses. One catastrophic loss could set your business back for years or even bankrupt it.

How do I Purchase a Commercial Umbrella or Excess Liability Insurance Policy?

Purchasing a commercial umbrella or excess liability insurance policy to protect your business is a wise investment. If you suffered a catastrophic loss or claim, the risk to your business and assets is higher without a commercial umbrella or excess liability insurance policy. When considering this purchase, ask yourself how much your business could afford to pay for a catastrophic claim that exceeds your underlying coverage?

Talk with your agent or compare options online – a commercial umbrella or excess liability insurance policy can provide you peace of mind for a small cost. Coverage is often sold in million-dollar increments, so when you review your current coverage, you can consider how much excess coverage you would like.

Many insurance carriers sell commercial umbrella and excess liability insurance policies, so shopping around is an excellent way to compare your options, rates, and conditions. Reviewing your current coverage and business assets, talking with your partners, and reaching out to your agent are the first steps in purchasing a commercial umbrella or excess liability policy.

How do I Learn More?

To learn more about Commercial Umbrella and Excess Liability Insurance, contact the experts at Jump Insurance. Our licensed experts will be happy to answer any questions you have.