Umbrella and Excess Liability Insurance
Higher Liability Limits to Protect Your Business Against Claims
Safety Nets for the Unexpected: Commercial Umbrella and Excess Liability Insurance
Commercial umbrella and excess liability insurance is a type of coverage that kicks in when your existing liability insurance—such as general liability, commercial auto, and employer’s liability insurance—is exhausted. It provides additional coverage beyond the limits of these policies. Think of it as an extra layer of coverage that protects your assets and financial health when claims exceed the limits of your underlying policies.
What Does Umbrella and Excess Liability Insurance Cover?
Both commercial umbrella insurance and commercial excess insurance function similarly in many aspects:
- Both types offer additional protection to cover claims that exceed the limits of underlying policies.
- They are “follow-form” policies, meaning they adopt the same coverage terms, conditions, and exclusions as found in the primary policy.
- They are triggered when the limits of the underlying policy are exhausted, providing coverage for the additional limits.
However, commercial excess liability and umbrella insurance can sometimes differ in the following ways:
- Excess liability policy: Adds higher limits to a single underlying liability policy. If you have both a general liability policy and a commercial auto policy and desire higher limits on each, you may require two excess liability policies.
- Umbrella policy: Provides additional limits to one or more underlying liability policies. In the example provided above, one umbrella policy would add higher limits to both the general liability and the commercial auto policy.
The Consequences of Insufficient Liability Insurance Protection
Not having umbrella and excess liability insurance can expose individuals and businesses to significant financial and legal risks. Without this coverage, they may face substantial out-of-pocket expenses and potential bankruptcy if damages from lawsuits exceed the limits of their primary insurance policies.
Frequently Asked Questions
The amount of coverage needed varies by business, depending on the level of risk, the assets to be protected, and the limits of existing liability policies. Businesses typically purchase coverage in increments of $1 million.
Factors include the type and size of the business, the industry, the amount of coverage purchased, and amount of underlying coverage.
If a claim exceeds the limits of both the primary insurance and the umbrella/excess insurance, the business is responsible for paying the remaining amount out of pocket. This could potentially lead to significant financial strain, highlighting the importance of adequately assessing coverage needs.
Yes, this type of coverage can cover legal defense costs that exceed the limits of the underlying liability policies. This includes attorney fees, court costs, and settlements or judgments.
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Additional Coverages
General Liability Insurance
General Liability Insurance keeps your business safe from financial trouble if someone gets hurt or their property gets damaged because of your business. It covers legal fees, medical expenses, and damages. Perfect for any business wanting peace of mind against unexpected claims.
Worker's Compensation Insurance
Mandatory in most states, this insurance covers medical expenses and a portion of lost wages for employees who get injured or sick from their job.
Commercial Property Insurance
Plan for the unexpected. Protect your company’s physical assets, such as its building, and contents, including inventory, furniture, and equipment with commercial property insurance. It covers losses should your business have a fire, explosions, burst pipes, storms, theft, or vandalism.
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