Who is commercial umbrella insurance for?

It is a well-known fact that the most catastrophic lawsuits are the ones related to the liability of business owners. Another fact is that general liability policies usually fall short of providing adequate protection in the event of a catastrophic business liability suit. Business owners can prevent the latter by purchasing a commercial umbrella insurance policy.

Characteristics of Commercial Umbrella Insurance

Commercial umbrella insurance is a necessary protection against catastrophic loss a business might suffer as a result of a liability lawsuit. Therefore, business owners who find themselves particularly exposed to the risk of being sued for large amounts should consider topping up their existing general liability policies with a commercial umbrella. Here are some of its most important characteristics:

• Commercial umbrella insurance provides liability coverage for bodily, personal or advertising injury, and property damage, over and above any existing general liability policies. The provider of commercial umbrella insurance agrees to pay the share of the compensation, which is in excess of the policy limits of existing liability coverage, or in excess of the retained limit.
• The so-called retained limit of commercial umbrella insurance refers to either the underlying insurance policy limits, or the self-insurance retention (or SIR) - a deductible that the insured needs to pay before the policy can come into effect.
• In order to purchase a commercial umbrella, the business owner is required to have an underlying coverage such as Commercial General Liability insurance, Employers Liability insurance or Business Auto Liability insurance.
• A commercial umbrella will kick in once the limits on the underlying policy have been exhausted or if a loss is not covered by the underlying policy.
• If the insured does not have an underlying insurance coverage, they need to provide self-insurance retention (SIR) which can range from $500 to a million dollars, depending on the size of the business insured.

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