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Why Do I Need Commercial Umbrella Insurance for My Business?
Business Insurance | Insurance Essentials
By Nina Cutter
March 18, 2024 4 minute read
In the world of business, significant losses or lawsuits can deplete your existing insurance coverage limits, leaving your company exposed to financial risk. Let's dive into how gaps in general liability coverage can create vulnerabilities. For businesses facing these challenges, commercial umbrella insurance offers a layer of financial protection above your organization's other liability policies. 

What is Commercial Umbrella Insurance?

Commercial umbrella insurance is additional liability coverage that goes beyond the limits of your business's general liability, commercial auto, and workers' compensation insurance. If a claim exceeds the limits of your underlying coverage, your commercial umbrella insurance will cover the additional costs, up to the limit you select. This coverage includes legal fees for defending lawsuits and, in some cases, may offer protection not provided by your primary policies.

Understanding Commercial Umbrella Insurance Coverage

While no insurance policy can cover every potential risk, knowing what commercial umbrella insurance typically covers—and what it does not—can help you plan for unforeseen circumstances.

Covered:

Not Covered:

When Do You Need Commercial Umbrella Insurance?

In today's litigious environment, the risk of lawsuits is ever-present, and defending your business can be costly. Assessing your risk and understanding the types of exposures your business faces can help you decide if commercial umbrella insurance is right for you.

Consider if your business has:

Imagine this scenario: 

"Green Horizons," a landscaping company with a vehicle fleet, faces an accident causing extensive property damage and injuries. The costs soar beyond the limits of their commercial auto and general liability policies. Here's where it gets interesting: With commercial umbrella insurance, Green Horizons navigates this financial turmoil, covering the excess costs and safeguarding the company's operational continuity.

How Much Commercial Umbrella Insurance Do You Need?

The right amount of coverage depends on your risk tolerance and the specific risks your business faces. Coverage typically starts at $1 million, with options to increase in $1 million increments. Assessing your business's risk profile will help you choose an adequate coverage limit.

Cost of Commercial Umbrella Insurance

Commercial umbrella insurance is often more affordable than you might think, especially considering the extensive protection it offers. It generally costs less than primary coverages because it is used after those limits are exhausted. The price depends on various factors, including coverage amount, business type, industry, and operational scale.

Getting a Quote

Start by speaking with an insurance agent at Chalmers Insurance, who can advise you on the best coverage options for your business. If you decide to explore further, be ready with details about your existing policies, past claims, and comprehensive business information.

In conclusion, commercial umbrella insurance provides a critical safety net for businesses, covering costs that exceed the limits of primary liability policies. While no one wants to face a lawsuit or significant claim, having commercial umbrella insurance ensures you're prepared for unexpected financial challenges. By partnering with Chalmers Insurance, you can secure the right umbrella insurance policy to protect your business and keep it thriving.

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