What does Commercial Umbrella Liability Insurance cover?
Commercial Umbrella Liability Insurance protects your business from holes or limits in existing policy coverage as well as from financially draining lawsuits. Just as you carry an umbrella to protect you from a potential downpour, Umbrella Liability protects your company from the types of claims that could close your business. Businesses choose Umbrella Liability to back up the limits contained in their underlying liability policies (commercial general liability, business auto, employer liability, and professional liability.) For the most part, it is used to cover exceptionally large events or losses with low probabilities of occurrence. Without Umbrella Liability, these events – as few and far between as they may be – would be financially devastating to many companies.
Excess Liability – will cover any excess liability over the coverage caps of your basic insurance policies. These policies may include Commercial Automobile, Professional Liability, and General Liability. A Commercial Umbrella policy will only kick in one these basic policies have hit their coverage caps. It essentially acts as additional coverage over the other covered amounts.
Here’s how it works:
- Assume a jury ordered your business to pay $3 million in damages for a liability claim, but your general liability policy has a $2 million limit. Your company would normally be required to cover the additional $1 million. However, with a $4 million Umbrella Liability policy, the $2 million commercial policy would exhaust itself, and then the Umbrella policy would cover the outstanding $1 million.
Coverage Gaps – covers a broader scope of liabilities that may fall into a gap. This can include a variety of legal fees and costs related to issues, such as libel and slander. These forms of coverage may differ depending on the specific policy you decide to go with.
Additional Limits – GL, Commercial Auto, and Workers Comp are the lines of coverage most often associated with an Umbrella policy. Umbrella Liability only insures you for additional limits based on the coverage in the underlying policies. An umbrella can exclude coverage for sub-limited incidents, double the sublimit, or include coverage up to the full limit of the umbrella.