How do commercial umbrella limits work?  

Are you wondering if you need commercial umbrella insurance? Commercial umbrella insurance helps pay for claims exceeding your standard policy limits. If you’re a business with a lot of risk for high-dollar claims, you may want to consider adding an umbrella policy. Let’s examine what commercial umbrella insurance is and how it works.

Commercial Umbrella Insurance in Florida

Commercial umbrella insurance is an additional policy you can purchase for your business. The umbrella policy can help cover large claims on your other types of insurance policies, including commercial car, general liability, workers compensation, and employment practices liability insurance.

Standard Insurance Policies

In order to get a commercial umbrella insurance policy, you need to have a standard policy.

  • General Liability – General liability is one of the most important types of policies you can get for your business. This policy includes bodily injury and property damage to a visitor or customer at your location.
  • Worker’s Compensation – This insurance covers any injuries your employees might experience while working for your company or on a job.
  • Employment Practices Liability – Employment practices liability is important if you have employees. This coverage helps pay for damages due to sexual harassment, discrimination, invasion of privacy, wage violations and wrongful termination.
  • Commercial Car Insurance – Commercial car insurance helps cover your business if you or one of your employees gets into a car accident in a company vehicle or a vehicle they are using for company business.

How Commercial Umbrella Insurance Policies Work

When your business encounters a claim that is higher than your standard limits, the umbrella policy pays the amount that exceeds your standard insurance policy.

For example, let’s say you have a $2 million policy for your general liability insurance. You encounter a claim that’s worth $2.5 million. Your standard general liability policy would cover up to $2 million dollars. Without an umbrella policy, your business would be responsible for paying for the $.5 million dollars that goes above your standard policy limits. With an umbrella policy, the umbrella coverage would pay the additional $.5 a million dollars. It is in this way that having an umbrella policy can save your business lots of money if you happen to encounter an unusually large claim.

Commercial Umbrella Policy Limitations

As good as umbrella policies are, they do have some limitations. The biggest limitation is that the total amount of the umbrella policy is cumulative for the policy period. This means that if you have a commercial umbrella policy for $2 million dollars, and you encounter a claim that’s half a million dollars over your standard insurance policy, your commercial umbrella policy would pay the excess amount, leaving you with $1.5 million left on the policy.

How to Determine if You Need a Commercial Umbrella Policy

The truth is that if you own a business that has employees, interacts with customers or involves traveling to customer sites, you should consider getting an umbrella policy. Remember, even a small incident can cost hundreds of thousands of dollars.

For example, let’s say that your employee is putting a roof on a multi-million dollar home in a high-dollar, luxury neighborhood. Suddenly, the ladder your employee uses to carry tools and supplies to the roof blows away from the house. The ladder then crashes through a window and lands on the neighbor’s Buggati. Would your standard liability policy cover all of that damage?

How Much Commercial Umbrella Insurance Should You Purchase?

When considering how much commercial umbrella insurance to purchase, consider all of your business policies. If you’re a business with lots of insurance policies and could face significant risk, it’s a good idea to get a policy with higher limits. Commercial umbrella policies are typically written for between $1 million and $15 million dollars. It’s important to keep in mind that every claim on your commercial umbrella insurance subtracts from that amount, so if you think you’ll need that policy more than once during the term, you’ll want to get a commercial umbrella policy with higher limits.

How Fearnow Can Help You Get the Right Umbrella Policy for Your Business Needs

Our agents at Fearnow can help you get a commercial umbrella policy that meets your needs. We can help you choose by listening to your concerns about your business’ risks and locating several policies from multiple carriers. We can do this because we have access to thousands of policies from hundreds of different carriers. This gives us the ability to find policies that meet your needs and your budget. We can also provide you with other types of business insurance, including commercial property insurance, tow truck insurance and workers compensation insurance.

To get a quote for umbrella insurance and to learn more about how an umbrella policy can help protect your business, give us a call at 813-689-8878.