Liability insurance covers you when another party sues you for damages you or your company are responsible for. Without liability insurance, you risk losing your business, your assets, your vehicles etc. Liability coverage comes in many forms including through your company auto insurance, business building insurance and so on.
However, often this coverage is very minimal and will not be sufficient should you find yourself in a pickle. Without the proper coverage, your business and everything you have invested in it could be lost to a lawsuit. What is umbrella insurance and why is it useful?
Commercial umbrella insurance is one of the least understood insurance policies in the industry. The main function of it is to extend your liability coverage. Liability coverage you already have may include general liability, employers liability, or hired and non-owned auto liability.
A typical minimum coverage amount for umbrella insurance for small business is one million dollars – often double what you would get with your other policies. The starting price for such a plan tends to run around $500 to $800 per year.
The way umbrella insurance works is that it’s an amount on top of your current liability coverage. In other words, if you have one million in umbrella liability and you get sued for one and a half million, the first amount would come out of your general business liability insurance or your employers liability, and any additional costs come out of your umbrella liability policy.Top 5 reasons why it’s important for a small business to have umbrella insurance:
- It’s more cost effective to get umbrella insurance than to raise the limits on your existing liability policies.
- You can expand your coverage on several kinds of policies under one umbrella policy.
- Umbrella coverage gives you extra help for covering certain types of claims that might not be covered by your other liability policies.
- If you deal with high-net-worth individuals in your business, umbrella insurance is particularly useful in covering higher lawsuit settlements.
- Umbrella insurance gives you an overall peace of mind that you have plenty of coverage across all of your various policies.
In addition to covering your settlement costs, something that commercial umbrella insurance will cover that regular liability often does not, is your legal expenses. As any business owner knows, legal expenses in and of themselves can be significant. It’s important to have coverage for that as well so your overall business stability is in no way threatened.
So how do I get started? If you’re interested in getting more information about how an umbrella insurance policy could benefit your business, please contact us to request a proposal. By talking with an independent insurance advisor, you can get advice on the best policies for your industry. This will ensure you don’t overpay for coverage that you don’t really need.