What Is an Umbrella Policy and How Can It Help Your Business? - Growth Freaks

What Is an Umbrella Policy and How Can It Help Your Business?

Two toy cars, one white and one red, illustrating a car crash, above the words 'Got Insurance?'

A commercial umbrella insurance is very helpful for businesses. It offers some extra liability coverage. Today we are going to expand on what is an umbrella policy and why should you consider having one. Many people recommend it for businesses because you never know when it might save you some money.

What Is an Umbrella Policy? – A Brief Definition

An umbrella policy is, basically, an extension of liability coverage for a certain layer of insurance. This helps you protect the business assets, for example. Without one, a business owner would have to pay out of his own pocket certain costs, such as damage expenses, medical bills, legal fees, etc.

What Does It Cover?

Now that you know what is an umbrella policy, you may want to know what exactly does it cover. One instance where this could be extremely helpful is when the price for a lawsuit goes beyond the limit of the primary business liability coverage. As such, it protects you from accidents such as:

  • An advertising error that causes major lawsuits, whose costs are worth more than the coverage limits for your primary business liability insurance;
  • A customer injures himself by accident in your office, and the medical costs of the injuries are more than your primary insurance, as we explained above.

Of course, these are just two of the situations that may appear and require an umbrella policy. There are other risks as well, and the sad part is that you can’t foresee them all.

How Can It Help Your Business?

After finding out what is an umbrella policy and what does it cover, you may ask yourself how can it help your own business. Essentially, as we previously mentioned, it helps you protect your business against any unforeseen costs. Lawsuits can be very dangerous for a company, which is why the proper insurance can ultimately save your business. There are two different goals of a commercial umbrella insurance:

  • Broadening the Coverage

You may already have some underlying policies, and this extra insurance broadens their coverage. For example, if you have an auto liability policy that only covers a possible accident in a certain area, with an umbrella policy you will be covered for the entire territory.

  • Expanding the Limits

Remember those underlying policies we mentioned earlier? They already have some limits, and the umbrella policy can expand them. Let’s say your primary policy allows for $1 million coverage for each occurrence, or a $2 million one in total. With a commercial umbrella policy, you can expand the limits to $3 million for an occurrence and a total of $4 million.

Conclusion

An umbrella policy is great if you want to be prepared for any kind of accident. Lawsuits and accidents are the top causes that waste a company’s (and the bosses’) money. Combine it with other proper liability policies and you’re set. However, make sure that they cover your specific needs and are suitable for your type of business. If you’re not sure what to choose, it’s better to ask for help from a specialist.

Image source: 1

Author: Amanda Knowles

Comments

comments