There are several different commonly used names that describe commercial umbrella insurance. Names you may hear can include umbrella liability insurance and excess liability insurance, but the meaning is one and the same. While not every business may elect to carry commercial umbrella insurance, it can be a useful and valuable protective policy to have that can be worth its weight in gold should it be needed. Learn more from insurance experts about what commercial umbrella insurance is and decide if adding this type of insurance to your business insurance coverage is the right choice for you.
In short, commercial umbrella insurance is a policy that will provide extra coverage beyond what a traditional business insurance policy is equipped to provide. Commercial umbrella insurance can cover gaps between settlements and policy maximum payout limitations for general liability, business liability, employer's liability, auto liability, and potentially other types of liability insurance gaps as well. The standard commercial umbrella insurance policy will not cover certain types of omission errors nor will it cover professional liability policy settlement overages, although it may be possible to purchase additional commercial umbrella insurance coverage separately to cover what is called "E&O" or "errors & omissions" and professional liability.
When a settlement is reached, a commercial umbrella insurance policy will kick in to cover the difference between what the maximum payout can be under your traditional insurance policy and the maximum payout for your commercial umbrella insurance policy. The most common way that commercial umbrella insurance is offered is in purchase amounts of one million dollars. Since commercial liability insurance will not kick in until the maximum payouts have been reached with your traditional business insurance, you can think of your policy as adding another level of coverage on top of what you already maintain. So if your regular business insurance coverage covers you up to one million dollars, with a commercial umbrella insurance policy that provides one million dollars of coverage, you will now have coverage up to two million dollars.
Commercial umbrella insurance cannot be purchased as a standalone policy, but must be accompanied by an existing general liability or business liability insurance policy. The easiest and most common way to obtain a commercial umbrella insurance policy is to purchase it from the same provider who issues your general or business liability insurance policy. If it is not possible to purchase your commercial umbrella insurance from the same insurer for any reason, then a simple internet search will likely yield enough information to begin your search. You can also contact local Chambers of Commerce and ask for referrals from business colleagues. Be sure that the issuing provider is willing to review your current levels of coverage, make recommendations from the standpoint of what other businesses tend to need from your size and net worth, clearly explain how and when your policy activates, and can demonstrate a quality, responsive customer service focused attitude.