In our increasingly litigious society, business owners must be prepared for the possibility of lawsuits regardless of company size, location, or industry. A lawsuit could involve large legal fees, plus an award for medical expenses, pain and suffering, or any number of grievances. In addition, negative publicity and lost time resulting from court-related activities can have a substantial impact on your business.
A commercial umbrella liability policy can provide protection in million-dollar increments above the required liability limits of your commercial general liability, auto liability, and employers liability (workers compensation) policies.
How It Works
Umbrella coverage takes effect when the limits of your underlying policies have been exhausted, and may also cover what your current business policies exclude. Typically, a commercial umbrella policy may offer extra protection for legal defense expenses, losses occurring outside the U.S., and personal injury or property damage claims. In addition to covering the named insured, it may also protect your executives, employees, stockholders, and others you agree to protect under a written contract, at least to the extent that losses occurred within the scope of business duties.
However, while umbrellas provide for losses and liabilities above and beyond the scope of other insurance, certain exclusions may still apply. In most cases, you will be expected to maintain your underlying insurance, without alterations in terms or conditions, during the term of the umbrella policy. You may also be required to carry certain amounts of insurance in these underlying policies in order to qualify for an umbrella. But, the cost for your umbrella coverage will likely be lower if your primary deductibles or policy limits are higher.
Be sure to review your insurance policies regularly because the amount of umbrella coverage you need may change over time. For instance, changes in your underlying policies, such as new exclusions or limitations, may leave gaps in your umbrella coverage. Also, inflation and ever increasing legal awards often necessitate an increase in coverage.
Your primary insurance may not always provide all the protection you need, especially when an expensive court settlement is involved. Contact us for more information on how you can help protect your business from lawsuits and other potentially catastrophic losses.
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