This policy picks up where your auto liability, general liability or other liability coverage stops. With most accidents that occur, your standard policies will provide adequate coverage for your business, however when a catastrophic liability loss occurs, an umbrella insurance policy can mean the difference between staying in business or not.
If your current General Liability policy covers you for $1 million and a covered claim against you is awarded $2 million, your business umbrella coverage can pay the outstanding $1 million. If no commercial umbrella policy is in place, you could very well be out of business.
An umbrella policy can be a great value considering the additional insurance protection for a relatively small premium. Umbrella policies are considered secondary coverage, which means that your primary policy’s limits must be exhausted before coverage takes effect.
How much coverage does your business need? It depends on the type of business you own and how much coverage you already have.
Commercial Umbrella policies do not cover everything. Be sure to understand what exclusions are in your policy before you purchase coverage. For example, a commercial umbrella or excess liability policy will not protect either errors and omissions or a professional liability policy.
Also, to qualify for a commercial umbrella policy, the insurance company may require that your underlying policy has limits that meet a certain threshold.