Commercial Umbrella Insurance | Cost, Coverage, Options, and How It Works


Commercial umbrella insurance provides an extra layer of liability protection by covering costs that go beyond your other liability coverage limits. In other words, commercial umbrella insurance complements your other liability coverages by taking over when your other liability coverage limits have been reached.

For example, if your company is found liable for a customer’s injury at your place of business and you are sued for $1.5 million but only have $1 million in liability coverage, a commercial umbrella policy could make up for the $500,000 shortfall, subject to the policy’s coverage limits.

Commercial umbrella insurance cost

A commercial umbrella insurance policy with $1 million in coverage can cost as little as a few hundred dollars a year. However, umbrella insurance isn’t offered as a stand-alone coverage; it works in conjunction with your other liability coverage’s, such as general liability insurance –which is your most expensive policy.

What does umbrella insurance cover?

Commercial umbrella insurance covers the same types of costs as business general liability insurance, such as medical expenses, attorney fees, and damages when your company faces a lawsuit.

Commercial liability insurance options

Besides commercial umbrella insurance, there are a number of other endorsements that could be appropriate for your business needs, including:

  • Hired and non-owned auto liability insurance, which provides auto liability coverage when employees rent or use their own cars for business use.
  • Employment practices liability insurance, which offers protection against employee lawsuits.
  • Directors and officers liability insurance, which covers defense costs and damages made against a director or officer.
  • Liquor liability insurance, which protects you against injury claims when alcohol is furnished during the course of your business operations.
  • Fire legal liability insurance, which provides coverage in the event you are found liable for a fire in the space you rent or lease

Umbrella liability insurance provides an extra layer of protection against bodily injury and/or property damage. Essentially, it picks up where your business auto liability, general liability or other liability coverage stops.

How umbrella insurance works

A commercial umbrella policy serves 2 distinct purposes:
  • It increases the liability limit that your company already has in existing, or underlying, liability policies. For instance, if your general liability policy offers $1 million coverage per occurrence or $2 million total, you could get a $2 million umbrella policy and increase those limits to $3 million per occurrence and $4 million total.
  • It broadens coverage for things that your underlying policies may not cover. For instance, if your auto liability policy covers accidents that might occur in a specific area, an umbrella policy could expand the coverage territory.

Customize your umbrella policy to fit your business

Here’s what you need to provide for a customized umbrella policy quote.
  • The financial and operational details of your business
  • A copy of the declaration page of your current general liability and business auto insurance policies (if you have them)
  • Any prior losses your company has experienced. Keep in mind that a loss doesn’t necessarily mean your premium will be higher
  • A list of your company’s officers, their positions and experience, if they’re different from the owners of record
  • Annual payroll and a breakdown of employees who are full-time, part-time, subcontractors or consultants

Be sure to mention whether you carry professional liability, errors or omissions liability, liquor liability, employee benefits liability or employment practices liability insurance. And if need be, ask about Commercial Real Estate Insurance…

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