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Your Total Guide to Understanding Umbrella Insurance

Your Total Guide to Understanding Umbrella Insurance

A business insurance umbrella policy can help keep you and your business safe in case of a lawsuit, accident, or anything else you might not see coming.

Nobody is perfect, and accidents inevitably happen, even in business. That’s why business owners invest in an insurance policy: to avoid financial ruin if they accidentally cause property damage, major injuries, or another accident within their company. The issue is that an insurance policy is not always perfect, either. Thankfully, that’s where commercial umbrella insurance comes in.

So, what is commercial umbrella insurance? And how can it help save business owners in trouble? Understanding an umbrella policy is crucial in the business world, and today, we’re exploring the ins and outs of umbrella insurance.

Continue reading for more information on umbrella insurance for businesses below.

Umbrella Insurance for Businesses: What Is It?

In the business world, being ready for both the success you hope to have, and any unexpected disaster you don’t anticipate is essential. Commercial liability umbrella insurance, often called CLUP or simply umbrella insurance, provides additional coverage for worst-case scenarios.

Commercial umbrella insurance gives business owners an extra layer of protection that helps cover a claim that exceeds the limits and maximums of various liability policies. Without a business insurance umbrella policy, business owners are left to pay out of their own pocket for costs that go past their policy limits. This may include:

  • Medical costs
  • Legal bills
  • Settlements and judgments
  • Damage to others’ property
How Does Business Umbrella Insurance Work

How Does Business Umbrella Insurance Work?

Business umbrella insurance extends the limits of various liability insurance policies, such as commercial auto insurance or general liability insurance. Commercial umbrella insurance is typically flexible and extends the liability coverage that you have in other policies, even from other insurance companies. 

If you have a commercial car insurance policy from a different insurer, you can receive an additional layer of coverage and protection from another company to extend its limits.

Keep in mind that business umbrella insurance is different from excess liability insurance. Excess liability coverage extends the maximums on one specific liability policy. 

However, a commercial umbrella insurance policy is a kind of excess liability insurance that extends the maximums of different policies, giving the insured a much wider spread of protection (hence the name “umbrella”).

Suppose you’re a business owner, and one of your employees is in an accident while making a delivery to a client. They accidentally crash into another person’s vehicle, resulting in significant injuries and damage. The cost to repair the damages, as well as the medical bills, exceed your company’s liability insurance limits. 

Excess liability insurance coverage helps pay for the amount that exceeds your general liability or commercial automobile policy. Commercial umbrella insurance helps cover the costs exceeding the maximums of both general liability and commercial automobile policies.

Understanding an umbrella policy for your business is key! It’s also important to note that umbrella insurance policies (both personal and commercial) add an additional layer of protection only when an active insurance policy exists. If you do not have an active general liability insurance policy, you cannot receive commercial umbrella coverage.

What Does a Business Insurance Umbrella Policy Cover?

Umbrella insurance for businesses helps cover the following:

  • Property damage that your business or employees caused.
  • Bodily injury, such as a customer getting injured on company property.
  • Lawsuits from employees, customers, or clients with work-related illnesses or injuries.

Another major advantage of umbrella coverage is that it often provides policyholders with coverage that’s not found in a base auto or business policy, such as:

  • Wrongful entry or eviction
  • False arrest, detention, or imprisonment
  • Invasion of privacy
  • Malicious prosecution

What Won’t a Business Insurance Umbrella Policy Cover?

A commercial umbrella policy does not cover all liability claims. It also will not extend the limits of certain policies, such as your commercial property insurance. 

Suppose there’s a fire, and it causes significant damage to your business equipment — so much so that the cost to replace and repair this property exceeds your commercial property maximums. You will have to cover the difference out of pocket because a commercial umbrella insurance policy does not cover business property claims.

Business Umbrella Insurance Maximums and Limits

While looking for an umbrella policy, you’ll find that insurers write their policies with aggregate limits and maximums. These limits range from one million dollars to $15 million or more. This number is the maximum amount your insurance company will cover for any claims made throughout your active policy period.

For those that already have an umbrella policy, if your business-related assets have grown, but your coverage remains the same, you should consider raising your limits. Call your insurance provider to discuss your options.

Who Needs Commercial Umbrella Insurance?

Generally speaking, liability risks are higher the more a small business interacts with customers and clients in person. Your risks might be even greater if your employees are required to use dangerous equipment or heavy machinery.

If you believe there is a chance that the cost of the claim would exceed your liability limits, consider investing in commercial umbrella insurance.

This coverage may help if your business:

  • Allows the public to stop by during open hours — If people are able to visit your business, it drastically increases the risk of bodily injury. For instance, wholesales often work with machinery to restock shelves during business hours, such as moving ladders, forklifts, and scissor lifts.
  • Using this kind of equipment around customers poses a serious risk of injury. If someone gets hurt, you could face pricey medical expenses and lawsuit costs that exceed your general liability limits.
  • Works on somebody else’s property — Working offsite can also increase your company’s liability risk. Suppose your employees are working at a client’s house. They could accidentally damage cars, break windows, put holes in the walls, and more.
  • These accidents could end up costing more than your policy covers, leaving you to pay out of pocket unless you have additional coverage and protection.
  • Frequently interacts with clients or customers — As illustrated above, whenever clients, customers, or other people are present, the risk of liability skyrockets, leaving you, the business owner, potentially at risk of exceeding liability limits.
Which Industries Most Often Invest in Umbrella Insurance

Which Industries Most Often Invest in Umbrella Insurance?

A range of small business owners rely on an umbrella policy to affordable increase their liability coverage and protect their bottom line, such as:

  • Cleaning businesses.
  • Real estate professionals.
  • Auto dealers and services.
  • Wholesale and distribution centers.
  • Manufacturing businesses.
  • Retail businesses.

How Much Does a Business Umbrella Insurance Policy Cost?

The cost of commercial umbrella insurance coverage varies from state to state, insurance provider to provider, and policy to policy. There are many depending factors, such as:

  • Limit amount.
  • Business size.
  • Amount of underlying coverage.
  • Type of business.
  • and more.

The best way to find out more about your insurance cost is to get a quote.

How to Get a Business Umbrella Insurance Policy Quote

Getting a commercial umbrella insurance quote online is quick and easy when you work with a knowledgeable and trusted insurance expert. Before you begin, make sure you have a copy of your current commercial automobile insurance and business liability insurance policies. You will need to know how much coverage you currently have for each policy to get an accurate quote for umbrella insurance.

Still trying to figure out where to start? Let the professionals at Bear River Mutual Insurance lead the way.

Let the Experts at Bear River Mutual Help You Find Your Business Insurance Umbrella Policy

At Bear River Mutual Insurance, we believe it never hurts to have a backup plan in place for when the unexpected occurs, and having a business insurance umbrella policy is a great way to prepare for the unexpected.

Understanding an umbrella policy and its ins and outs is essential, and our team is here to help you all along the way. If you need guidance on the best, affordable insurance options for your business or have general questions, it’s best to reach out to a trusted insurance agency.

Insurance is an essential component of running a business, whether it’s large and corporate or small and startup. Without it, your company, your employees, your assets, and everything else you’ve worked so hard for are at risk. That’s why our team of knowledgeable and trusted professionals is here to help you find the best insurance policy for your business that provides all the coverage you need and more.

Not a business owner and don’t need business-related insurance? That’s fine! We specialize in all types of insurance policies, including auto, home, renters, earthquake, and personal umbrella policies. Regardless of where you are in life, having safety nets in place can save you from financial ruin, and insurance is a great place to start.

Bear River Mutual is an experienced insurance company with many decades of experience. Our skilled insurance specialists are here to work with you to find the right policy for you, with coverage that meets your needs and budget.

You can find our trusted team in three convenient locations in Northern Utah to serve you better: Salt Lake City, Provo, and Orem. Contact Bear River Mutual Insurance to receive your free quote today.

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