What Are Business Umbrella Policies?

Running a business can be a lot of work and pose several risks. These risks stem from unforeseen circumstances and result in significant losses for the business owner. Therefore, it's ideal to own an insurance policy to help mitigate the effects of these losses, especially regarding leftover or spillover liabilities after reaching the limits of your original policy. This is where business umbrella policies come in. Learn more about this type of policy as you read on.

What is a business umbrella policy?

A business umbrella policy refers to an insurance policy that helps add an additional layer of protection to other insurance policies to protect against catastrophic business losses. It provides coverage for various risks, including bodily injury, property damage, and advertising injury, and so on.

What does business umbrella policy cover?

Business umbrella insurance policies exist to cover what other insurance policies don’t. Some of the things business umbrella insurance covers are listed below.

Claims exceeding the limits of your existing policies

For instance, if your business car insurance policy covers $2 million in bodily injury or damage to your vehicle, you were sued for $5 million. A business umbrella insurance policy will cover the $3 million difference. When every other insurance coverage has been maxed out, the business umbrella policy picks up from there.

Third-party damage

Most business insurance policies only cover the equipment you use only. If you have a business car liability or have to deal with employee injury lawsuits, coverage isn't provided. Additionally, if you have to rent, and subsequently damage a piece of equipment, you are liable for the payment. A business umbrella policy covers these liabilities and protects your business from bearing the brunt of such claims.

How does it work?

Business umbrella insurance coverage only comes to play when you have exhausted your underlying coverage. Imagine that you have a general liability policy with a $3 million-per-occurrence limit. Subsequently, a customer gets injured in your store and decides to sue you for, say, $5 million, and the court awards them $4 million.

In this case, you can file a claim with your business umbrella policy after your general liability has paid the $3 million so they can cover the difference. The business umbrella policy covers the $1 million leftover.

Who needs a business umbrella policy?

As a business owner, you should consider a business umbrella policy if you want to sign up a big client with the potential for equally big liabilities.

Additionally, if your business has a lot of contact with the public, the potential for slip-and-fall injuries necessitates a business umbrella policy. You should also consider a business umbrella policy if your business comprises serious health hazards, or you own a fleet of vehicles.

You’ve worked so hard to build your business. Now, protect it with a business umbrella policy

You’ve worked hard in getting your business to this stage; you shouldn’t watch it crumble or struggle to stay afloat. With a business umbrella policy, you can safeguard your business against the financial risks that come with catastrophic incidents and unexpected lawsuits. To learn more about business umbrella insurance and how it can benefit your business, reach out to us today.