Commercial general liability and commercial auto policies typically have an occurrence limit of $1 million. If you find that you need additional liability protection, an umbrella policy is often the most efficient tool for providing this need.
When do you need an Umbrella?
Contracts and Agreements
Contracts and leases may have requirements to carry a higher liability limit than $1 million per occurrence . The risk transfer and insurance provisions within business agreements often trigger the need for higher liability limits. Read before you sign the agreement to be sure you have adequate coverage for the contract.
Assets Exposed
The growth of your personal or business assets may trigger the need for higher liability limits to protect your interests. As your business grows, it has greater assets that are exposed to a loss. You need to match your insurance protection to this exposure.
Specific Exposures
You may have activities, products or services that have an inherent hazard of serious loss. The potential judgment in these cases can be extremely high. You need to adequately protect yourself from a large jury verdict. Some excess liability exposures include pools, playgrounds and other recreational exposures. High severity injury from a product liability event is also a common driver for umbrella coverage.
What does the Umbrella Cover?
Umbrella policies are excess liability policies. The do not offer any additional property insurance protection. They are designed to offer additional liability limits and are typically over your general liability and automobile coverages.
The primary qualifier for umbrella coverage is that the underlying policies have limits that are acceptable to the umbrella carrier and the underlying insurance company is acceptable to the umbrella carrier.
If you have additional liability policies such as professional coverage, or specific endorsements for exposures such as sexual molestation, you need to confirm that the umbrella will cover these additional coverages.
Umbrella insurance can applied to your automobile liability policy. This is subject to the underlying limits and carrier being acceptable to the umbrella company. Consider having your umbrella cover your Uninsured and Under-insured liability exposures. This can protect you from a devastating claim when the other party has liability but limited resources.
Policy Structure
The commercial umbrella policy will have a list of underlying policies shown on the declarations page. Carefully review this information to be sure that the expected liability policies are present.
The umbrella policy can be a “follow form” product that mirrors the coverage terms and conditions of the underlying insurance policies and adds additional dollars to the coverage. If the umbrella is from the same insurance company as the underlying policies, this is the most common arrangement.
If the umbrella is not from the same insurance carrier, it may have terms and conditions within the umbrella policy that are different from the underlying policies. This is common when seeking an umbrella over professional liability policies or other specific exposure related liability coverages. This is when you need an insurance professional to analyze the coverages and make sure you have what you expect.
The Driehaus Difference
Protecting your business is our passion. We have the experience and product knowledge to properly analyze and place your umbrella coverages. Excess liability has twists and turns that must be carefully navigated to get you to the right place. Reach out to us by phone, 513-977-6860 or on the internet at www.driehausins.com for a professional insurance consultation.