Commercial umbrella insurance is an extra layer of liability policy which covers costs that go beyond your underlying liability coverage limits such as commercial general liability, business auto policy, and other liability coverage. It is also designed to provide protection against catastrophic losses which can otherwise jeopardize your finances or even your operations if the current policy does not offer sufficient amount of coverage. Most umbrella policies provide an extra $1 or $2 million of coverage and complement your other liability coverage by taking over when that coverage’s limit has been reached. By doing so, an umbrella policy can fill the gap that exists between your limits and your potential claims.
The umbrella policy serves three purposes:
- It provides excess limits when the limits of underlying liability policies are exhausted by the payment of claims
- It drops down and picks up where the underlying policy leaves off when the aggregate limit of the underlying policy in question is exhausted by the payment of claims
- It provides protection against some claims not covered by the underlying policies, subject to the assumption by the names insured of a self-insured retention.
Commercial Umbrella Insurance is useful because it’s an inexpensive way to get more coverage rather than individually increasing your underlying policy limits. Premium for commercial umbrella insurance is dependent on the type and size of the business.