3 Important Things You Should Know About Commercial Umbrella Insurance

Posted By: Team Moody,

Regardless of how large or small a business is, there is always the possibility of facing a customer’s lawsuit. As a business owner, you will naturally want to avoid liability claims because of the losses you may incur. Therefore, you should always prepare for the worst-case scenario in which a consumer files a claim against your company. Although you may have general commercial liability insurance that will cover some of the legal costs and damages, the coverage may not be sufficient. This is why it is essential to get MD commercial umbrella insurance for your business.

What is commercial umbrella insurance?

Most business owners have commercial general liability insurance that protects them from claims resulting from negligence. But this type of insurance doesn’t always provide adequate protection against liability claims. This is where commercial umbrella coverage can benefit you.

Commercial umbrella insurance provides excess liability coverage on commercial vehicles, commercial general liability insurance, workers’ compensation, and more. It provides additional coverage for business owners in the event of a lawsuit that exhausts a primary insurance policy’s limits.

Options for customization

One of the main benefits of commercial umbrella coverage is that the terms can be tweaked to meet a company’s specific needs. Most commercial general liability policies offered by different firms are almost identical. This is because most conform to the ISO Commercial General Liability Coverage Form, which is the industry standard for commercial general liability policies.

Unlike primary insurance policies, commercial umbrella insurance can easily be tailored to address specific business needs. Customizing a plan involves talking with your insurance agent and providing information about your company’s requirements. Some essential details that you should provide your insurer are:

  • Operational and financial information
  • Your current general liability declaration
  • Annual payroll and list of employees
  • Past losses your company may have incurred

Who is umbrella liability insurance for?

Most businesses will benefit from the added protection that a commercial umbrella policy provides. However, some companies need this type of insurance more than others.

There are two factors to consider when determining how much you need commercial umbrella insurance: the industry you belong to and your degree of exposure to the public. The greater your chances are of encountering third-party liability claims, the more reason you have to get commercial umbrella insurance.

Companies that work directly with people or have a commercial property accessible to the public are more likely to face third-party liability claims. If an incident occurs on your company’s property, you could be liable for a claim

Furthermore, if you exceed your general commercial liability insurance limits, you will have to pay the medical and legal costs out-of-pocket. This can result in considerable expense.

Commercial umbrella insurance coverage

Commercial umbrella insurance kicks in when you exceed the limits of your primary liability policy. It effectively increases your liability coverage by providing additional funds for paying costly claims. This type of insurance can protect your business from different types of liability claims, such as:

  • Libel
  • Reputational damage
  • Vehicular accidents
  • Product liability
  • Customer injury

Additionally, commercial umbrella insurance operates on a “follow form” basis. This means that it will cover the same claims as your primary liability policy.

Although commercial umbrella insurance does provide additional coverage for liability claims, it may have exclusions other than those in your primary policy. Some insurance providers do not provide coverage for specific situations, such as pollution, employers’ liability, workers’ compensation, and employment-related problems. Some plans may not cover recalled products, work, or impaired property.

Getting commercial umbrella insurance

That being said, it is still generally advisable to get commercial umbrella insurance. It is always better to have the added coverage and not have to use it, rather than paying out-of-pocket for additional liability costs.

When you do decide to get commercial umbrella insurance, go with an insurance provider with a proven track record in the industry. Your insurance agent should be able to explain how much business umbrella coverage you need based on the following factors:

  • Your current profits
  • How much you expect your profits to increase
  • The value of your current assets
  • The expected value of your future assets
  • Whether or not your business operations involve products or services that put you at greater risk

By making a thorough assessment of these factors, your insurance agent should be able to propose a suitable commercial umbrella insurance plan for your needs.

About Moody Insurance Worldwide

Moody Insurance Worldwide, a division of Moody & Associates that was founded in 1914, is a leading provider of risk management programs and insurance coverage to individuals and businesses across the East Coast. We write all sizes of businesses, with technical expertise in many key industry areas, and provide personal insurance programs for estates and high net worth individuals. Our licensed, experienced commercial account managers can work with you to determine the coverage that you need at a competitive rate. Contact us today at (855) 868-0170 to learn more about what we can do for you.