Everything you need to know about business umbrella insurance in Florida

Key takeaways:

  • Business umbrella insurance offers additional liability coverage beyond other liability coverages. 
  • If you’re sued for damages that exceed your policy limits, a business umbrella policy covers the amount.
  • Most policies cover personal injuries, auto accidents, and adverting injuries.
  • It doesn’t cover damage to your property, errors & omissions, intentional acts, employee theft, criminal acts, and claims beyond the limit of the umbrella policy. 
  • The cost is about $40/month for each $1 million in additional coverage.

If you’re a business owner in Florida, it’s essential to have the right commercial insurance protection against potential risks. Business umbrella insurance is one type of policy you should strongly consider. It provides extra protection for claims that your regular business policies don’t cover. 

This primer will explain everything you need to know about business umbrella insurance, what it covers, why you might need it, and how much it costs.

What business umbrella insurance covers

Business umbrella insurance provides additional protection above the standard coverage offered by general, employers, commercial auto, and hired/nonowner auto liability.

An umbrella policy kicks in and provides extra coverage if you’re sued for damages exceeding your liability policy limits.

Umbrella insurance covers:

  • Personal injury (slip and falls, auto accidents, employee injury lawsuits)
  • Certain instances of property damage
  • Advertising injuries
  • Claims above liability limits
  • Claims above the aggregate limit of your policy (i.e., multiple minor claims that add up to more than your standard policy)
  • Claims not covered by your policy (i.e., rental equipment not covered by general liability)

Although the word “umbrella” might lead you to believe it covers everything, it has limitations. Typically, business umbrella policies don’t cover property damage, damage to your business vehicle, professional negligence (errors & omissions), intentional acts, employment-related practices (i.e., discrimination or sexual harassment), employee theft, or criminal activity.

Who needs commercial umbrella insurance?

If you have assets that could be at risk in a lawsuit, we recommend this type of coverage. Some businesses and industries are at higher risk of facing lawsuits from employees, customers, clients, or other companies.

Do you…

  • Own commercial property? 
  • Have a commercial property that’s open to the public? (e.g., retail store, medical clinic, museum, etc.)
  • Work on other people’s property? (e.g. construction/contractor, plumber/electric, landscaping, cleaning/maintenance company)
  • Have a legal obligation to carry umbrella insurance? (e.g., government contractor)
  • Run a higher risk of being sued?

Suppose you answered “yes” to any of the above questions. Unfortunately, we live in a litigious society. People are more likely to sue if they’re injured on your property. If the award amount is higher than your standard liability insurance, you could pay the remainder out of your pocket. In that case, you should ask your insurance advisor about buying an umbrella policy. 

How much coverage do you need?

The next big question is how much additional liability should you buy? Some business contracts require you to carry an umbrella policy with limits of $2 million. However, some contracts can require up to $5 million in additional liability coverage. 

Your industry or business needs can also factor into the amount of coverage required. Three factors go into this calculation. 

Factor 1: Your risks

First, you need to understand your risks. Certain industries and types of businesses come with a higher risk of facing a lawsuit. 

Businesses that:

  • Manufacture/distribute/sell products
  • Give advice or consultations
  • Work with hazardous materials or chemicals
  • Include a hazardous work environment for employees

Any business that engages in activity that carries a higher risk of injuries or property damage to others should probably have umbrella insurance.

Factor 2: The value of your property

Calculate the value of any property you own, including the physical building, equipment, furniture, and electronics. If the value adds up to more than your liability policy covers, we recommend buying a business umbrella policy. You don’t want to leave yourself open to severe financial loss if property is lost or stolen.

Factor 3: Danger posed by income interruption

In deciding how much coverage you need, consider that a significant lawsuit could cost more than your current assets. It could also threaten future income and even have lifelong implications for you, your employees, and your business.

How much does business umbrella insurance cost?

Commercial umbrella policies are not that expensive. Policy rates are based on several factors: 

  • Industry and risks
  • Coverage limits
  • Location
  • Number of employees
  • Number of vehicles owned/operated

The average policy costs around $40/month for each $1 million in additional coverage. The medium price is around $75 per month or $900 per year for a small business. Still, coverage cost hinges on your risks. 

Industries with the highest premiums include:

  • Building design
  • Consulting 
  • IT / technology
  • Professional services
  • Construction/contracting
  • Food and beverage
  • Landscaping
  • Cleaning services
  • Retail
  • Finance/accounting
  • Healthcare professionals
  • Personal care

Other types of commercial insurance to consider

In order for business umbrella insurance to work, you must already have certain commercial policies.  There are several commercial policies you should consider, no matter the size of your business. You may need some of these even if you’re self-employed or work from home.

General liability

General liability covers costs related to injuries or property damage to others, such as slip-and-falls, equipment injuries, contaminated food, and faulty products. 

What it covers:

  • Legal fees
  • Medical bills
  • Lost wages
  • Death benefits

General liability also helps pay for legal fees related to advertising injury lawsuits, such as mistakes on client projects, missed deadlines, copyright infringement, or damage to another company’s reputation. 

Note: You must have a general liability policy in order to get umbrella coverage.

Product liability

Product liability insurance covers damages caused by anything you sell, manufacture, or distribute. It includes property damage, injuries, and deaths. The policy also covers legal fees and judgments.

A product can be nearly anything, such as toys, electronics, tools, cars/car parts, medical products, furniture, appliances, and computer software/hardware. 

Property insurance

Property insurance covers any commercial space, whether you rent, lease, or own the property. It covers the building and things like the parking lot, fencing, and signage. It also covers content inside the building, such as equipment, furniture, electronics, computers, and inventory. If you rent/lease office space, the property owner may have a commercial policy covering the physical building. 

In the state of Florida, you’ll need a separate policy to cover hurricane damage (e.g., wind, flooding).

Commercial auto insurance

Commercial auto insurance covers any vehicle you use for business purposes, such as delivery vans, work trucks, fleet vehicles, passenger vans/limousines, and buses. You’ll need it for claims and legal expenses related to property damage, injuries, and deaths to others. Commercial policies protect you, your employees, and other authorized users, contractor, or drivers.

Put an umbrella over your business

If you are at risk of lawsuits that could max out your liability coverage, you may need a business umbrella policy. If anyone is injured on your property or you have assets, you could get left holding the bag.

Avante Insurance can help you secure the right umbrella policy for your business needs. Contact us to talk about your business needs and request a quote. 

This blog and website are made available by the publisher for educational and informational purposes only. It is not to be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state.