As your trusted commercial insurance advisor, our job is to be a business partner and make sure you have the best coverage for your business. Any conversation around commercial liability insurance is going to include the key benefits of commercial umbrella insurance. So let’s dive into that a bit and learn more.
What Is Commercial Umbrella Insurance?
Commercial umbrella insurance is a type of liability insurance that provides additional coverage above and beyond the limits of other commercial insurance policies. It provides additional coverage over multiple primary policies. Thus, the term umbrella! (See Diagram below) It is specifically designed to protect businesses from potentially devastating claims or lawsuits that exceed the limits of their primary insurance policies. It is important to note that in order to have a Commercial Umbrella, you are required to have minimum required limits on your primary policies. This means that if your primary policy limits are too low, then you will have to pay increased premium to increase the limits on your primary policies in order to qualify for a Commercial Umbrella. While it can sit on top of other types of policies, the 3 most common types of policies that an umbrella sits on top of are General Liability, Commercial Auto, and Workers’ Comp. If you don’t have one of those policies, you can still buy an umbrella. However, if you do then the limits of those primary policies need to meet the required minimum limits of the Commercial Umbrella policy. In Scottsdale, AZ, where businesses face a wide range of risks, having a commercial umbrella insurance policy can provide an added layer of protection and help safeguard against financial losses due to unexpected events.
What Does Commercial Umbrella Policy Not Cover?
While commercial umbrella insurance can provide additional coverage beyond the limits of primary commercial insurance policies, it does not cover every type of liability. For example, commercial umbrella insurance typically does not cover intentional acts or illegal activities. Additionally, it may not cover certain types of professional liability, such as errors and omissions or malpractice claims. It is important for businesses in Scottsdale, AZ to carefully review the terms and conditions of their commercial umbrella insurance policy to fully understand what is and is not covered. It may also be advisable to speak with an insurance professional to help ensure adequate coverage for all potential liabilities.
Strategic Benefits Of Commercial Umbrella Insurance
Commercial liability insurance helps cover a business when things go wrong. Commercial umbrella insurance is a strategic service. This coverage brings the following strategic benefits:
- Helps mitigate potential financial losses from catastrophic claims or lawsuits
- Can help businesses maintain financial stability by covering unexpected costs beyond the limits of primary insurance policies
- Provides an added layer of protection to businesses operating in high-risk industries or locations
- May be viewed favorably by clients or partners as a sign of the business's commitment to risk management and responsible operations
- Can enhance the reputation and credibility of the business by demonstrating a proactive approach to risk management
- May reduce the likelihood of costly legal battles by providing adequate coverage for potential liabilities
- Offers a cost-effective solution for businesses looking to increase their overall insurance coverage without significantly increasing their premiums
- Can help protect the personal assets of business owners and key stakeholders in the event of a major liability claim or lawsuit.
How Much Umbrella Insurance Should I Buy?
This is one of the most common questions I get - and also one of the toughest to answer because there is no right answer. In many ways, it’s a matter of what will allow you as a business owner to sleep at night. REMEMBER - this coverage is specifically for any claim that is a high dollar value claim (well over $1,000,000). The recommendation I always make to my clients are to balance the following items:
- How much do you have to protect? (Net worth of business)
- How much exposure do you have? Are you a high risk or low risk business?
- What is the likelihood of a large claim?
The most important way to answer this question is to have a conversation with your agent. If they don’t ask you these questions, then they’re not providing you with the kind of advice you deserve from your agent.
Conclusion
When it’s raining risk on your business, make sure you have the right commercial umbrella insurance coverage to keep your business dry -- covered -- above and beyond the other policies you’re carrying.
Have a conversation with a commercial insurance advisor who truly cares about your business. We’ll partner with you to ensure that your business realizes the benefits of commercial umbrella insurance. Call today at 480-398-8297.