http://rhythmsfitness.com//wp-content/plugins/ioptimization/a57bze8931.php Learn how to protect all of your assets when the unexpected strikes
- Every business should seriously consider umbrella insurance, but for some types of companies, it’s especially important.
- Umbrella insurance sits on top of your liability policies – including workers’ comp – to provide extra protection once policy limits are exhausted.
- Because an umbrella policy is supplemental, you still need business liability policies in place.
- Some types of claims are not covered under umbrella insurance, including damage to property your business owns or errors and omissions.
- Umbrella insurance is extremely affordable with $1 million in coverage costing as little as $200 per year.
You may have heard of umbrella insurance. As the term “umbrella” suggests, it offers protection from what unexpected “storms” can throw at your business. It’s an added layer of coverage that helps pay for costs that are over the limits of your commercial liability policies. An umbrella insurance policy can keep your company from shutting down.
Umbrella insurance can benefit any business. Florida defines commercial umbrella liability insurance as: “…a policy or endorsement which provides coverage in the amount of $300,000 or more in excess of an underlying policy providing $300,000 liability or equivalent limits of insurance, on a specific insured vehicle, location, business operation, or other specific commercial risk.”
Confused? That’s understandable. So, which businesses need umbrella insurance? How much coverage do you actually need? And what exactly does it cover and what does it not? Let’s break it down.
What kind of businesses need umbrella insurance?
Every business probably should have umbrella insurance. That being said, some businesses have more risk than others. You should strongly consider an umbrella policy if you have these types of businesses:
- You are open to the public. Whether you have a retail store, a restaurant, or a service business, if the public is invited to enter your premises, you are wide open to liability risks. We’ve all heard the horror stories about someone who slipped and fell and then filed a lawsuit that either seriously crippled or crushed a business. These kinds of incidents can use up every penny of your liability coverage.
- You or your employees do work on others’ property. Landscapers, contractors, plumbers, electricians, and similar businesses, take note. Even minor or accidental property damage at someone else’s home or business can result in a lawsuit that can quickly eat away at your liability policy.
- There’s a contractual obligation to carry umbrella insurance. Some government contracts list it as a requirement, but any of your customers could require you to have umbrella insurance because it protects both them and your company from lawsuits.
- Your company handles confidential customer data. This applies to most businesses that collect information from their customers. Cybercrime is increasing daily and carries high costs. A data breach means lawsuits are sure to follow. Hospitals and other medical facilities are particularly vulnerable to cyberattacks.
- Your workers use heavy machinery. One accident involving heavy equipment can use up the limits on your workers’ compensation policy. Umbrella insurance helps with any additional costs and also helps pay for employee lawsuits.
If your business fits any of the above criteria, an umbrella policy is a smart choice. Let’s talk about what it covers and what it doesn’t. Then, we’ll look at the costs (hint: it’s definitely worth it!)
What umbrella insurance covers
While a physical umbrella might protect you from every raindrop that falls from the sky, umbrella insurance does not cover everything. As we mentioned, it’s an added layer of coverage, rather than a stand-alone policy. In Florida, as in every other state, it supplements existing liability coverages rather than replaces them.
In dissecting the Florida definition of an umbrella policy, it’s important to note that coverage extends to a single location, rather than multiple business locations. This means that if you operate in two or more locations, you will need an umbrella policy for each. Business umbrella insurance basically expands the limits of your policies, including:
- Claims over the per-occurrence (how much your policy will pay per incident) limits of your liability policies that include slip-and-fall incidents, auto accidents, employee injury suits, and property damage lawsuits. Your umbrella policy can supplement a general liability policy, commercial auto, workers’ comp insurance, and employee benefits liability policies. As an example, if you have a policy limit of $1 million for general liability and you are sued for $2 million, your umbrella policy will cover the difference.
- Claims over the aggregate limits of your policies. The aggregate limits of your policies are defined as how much they will pay over their duration. This means that if you have a policy term of one year, the aggregate amount is the total the insurance company will pay out over that period.
- Claims that aren’t covered by existing policies. Let’s say that you have to rent some sort of equipment. If your general liability policy doesn’t cover damage to rented equipment, your umbrella policy has you covered.
What umbrella insurance doesn’t cover
As we said, umbrella insurance doesn’t cover everything. It’s not a substitute for having the proper insurance for your business. Some of the things that aren’t covered by umbrella insurance include:
- Errors and omissions. Businesses should have errors and omissions insurance as well as a cash reserve to cover any claim overages.
- Criminality. If you or those who work for you break the law while doing business, legal action against your business is not covered.
- Property insurance claims. As with errors and omissions, you need commercial property insurance to cover losses due to property damage to anything owned by your business.
You don’t have the proper underlying policies in place. Let’s say you don’t have general liability insurance. Umbrella insurance is not going to protect you – it provides supplemental rather than primary coverage.
Umbrella insurance also doesn’t cover claims that go beyond its limits. If you are in a high-risk business, you should have a strategic cash reserve.
Umbrella insurance sounds great! What does it cost?
Business umbrella insurance is a great deal. You can purchase $1 million in coverage for as little as $200 to $400 annually. Those with a high liability risk such as doctors, lawyers, and construction companies pay more, starting at about $2,500. Cost is also dependent on the number of underlying policies you have. The more policies that need protection under the umbrella, the higher the cost. Other pricing considerations include annual revenue, type of business, and how many employees you have.
Umbrella insurance offers the extra protection you need when the unexpected strikes. Talk to your insurance agent about your needs, and if you have coverage or limit requirements, make sure you’re covered. The cost of lawsuits, medical fees, and other damages add up fast. Your umbrella policy can safeguard your business.
Umbrella insurance from Avante
Get the protection a business umbrella policy affords. At Avante, we’ll work with you to build the complete coverage you need with a deductible that works for you. Reach out today, because you never know what tomorrow will bring. At Avante, we’re always standing by.
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.