Every business must have liability insurance, and the starting point is a general liability policy. However, while general liability insurance can prove essential to your long-term financial security, you should still not consider it a stopping point.
Instead, you will likely need to buy other coverage, including a commercial umbrella insurance policy. Consider why investing in a commercial umbrella plan will make your risk management strategy a lot more comprehensive.
Where General Liability Insurance Stops
When putting together your business insurance package, liability insurance is one of your foundation stones. It will pay for bodily injuries or property damage that you might cause to others through your negligence, products or completed operations.
Even if you didn’t mean for a problem to occur, that doesn’t mean you won’t have to repay someone because they accidentally got hurt. Liability insurance will make sure that you have the money available to reach a settlement with this party, or even fight a lawsuit if one occurs.
However, liability insurance is not all-encompassing. The policy will not cover all claims of negligence that might cause someone harm. Additionally, they will contain limits on how much they will pay you for a qualifying loss. Therefore, if a claim either is not covered by, or exceeds the value of, your liability policy, then you might not have the coverage you need. It is at this point that umbrella insurance becomes necessary.
The Necessity of Umbrella Insurance
A commercial umbrella insurance policy is designed to enhance your existing liability benefits. Therefore, it can essentially take over once you are confronted with the limits of your standard policy.
Suppose, for example, that you have $1 million in bodily injury liability coverage. However, a customer slips and falls in your store, and then sues you for $2 million. That is $1 million more than your liability coverage will pay. As a result, if you don’t have the benefits offered by commercial umbrella insurance, then you will have to pay for your losses out of pocket.
However, your umbrella policy will be able to step in and assist you with the additional cost that is not covered by your standard benefits. The way it works is that you will first file against your standard liability benefits, which will then pay up to their limits. After you have reached those limits, you can file against your umbrella coverage for the remaining cost of the claim. In some cases, you will be able to use your umbrella benefits to cover the full cost of a claim that standard liability insurance won’t cover.
Our job is to help you customize your commercial umbrella benefits to your advantage. That’s why we’re committed to helping you determine both where your standard liability coverage limits end, and where you can benefit from additional coverage.