Commercial umbrella insurance is used to protect a business when an accident occurs and existing liability policies for insurance is not able to cover all expenses related to the claim. Standard types of liability coverage for businesses can take care of general situations. However, when serious situations happen, umbrella insurance makes sure that a business is fully protected. Accidents are bound to happen and people are known to sue. Below are some possibilities that are involved with business accidents:
- A company party goes overboard that results in a number of damages and injuries
- The building of a business experiences a leakage of carbon monoxide resulting in multiple deaths or injuries
- A company is accused of not rendering professional and appropriate services
These policies pick up from where the business general liability, auto liability and any other types of liability coverage end. This insurance policy is a smart and inexpensive method in providing additional coverage against property damage and/or bodily injuries.
An example of a claim:
If a business has a policy that covers the business for a million dollars and the business is sued for around 1.5 million dollars, the umbrella coverage will pay out the outstanding amount of 500,000 dollars. This saves the business from having to come up with the outstanding amount from business profits.
Customizing Your Policy
Every business is different. Professional practices like law firms, veterinary offices and doctors rooms operate differently from business locations, such as, an auto body shop. The respective liability needs for each business will also be different. Umbrella insurance providers offer tailor made policies in order to meet up with the requirements of each business.
Business owners of auto body outlets may require a policy that will offer additional coverage for the garage liability, while a law firm that focuses on client entertainment may need additional limits on liquor liability. Businesses are encouraged to ask for a quote that will be customized in order to meet up with their specific needs of the business.
How Umbrella Insurance Operates
Commercial umbrella insurance policies are used for two purposes. It is used to expand on the current limit a business already has for existing or for underlying types of liability policies. If the general policy for liability offers a coverage of $1 million for each occurrence or cover for a total of $2 million. The umbrella policy allows the business to expand the limits to around $3 million for each occurrence along with a $4 million average and an umbrella policy of $2 million.
The second purpose involves expanding coverage for items that the underlying policy will not cover. For example if a liability policy for auto only covers accidents that occur in specific areas, the umbrella policy can be used to expand on the coverage area.
Business owners interested in umbrella insurance should provide their chosen umbrella insurance providers with operational and financial details of the business when obtaining a quote. The insurance provider will need to know about the business along with the current insurance policies that the business has.