How Excess Umbrella Protects Personal Assets

Many companies are unaware of the potential for a lawsuit that could leave them in financial ruin. Regardless of the type of business, whether it is in transportation, technology, manufacturing and distribution, hospitality and leisure, restaurants, or several others, excess umbrella insurance is added protection that could come in handy after the main or primary policy limits are exceeded.

What is umbrella liability insurance?

Even for those businesses that carry General Liability Insurance, there may come a time when a company might face a settlement or judgment in excess of their coverage limit. Without umbrella insurance coverage in place, an organization would be required to pay the uncovered expenses out-of-pocket.

For a single premium, this valuable policy adds another layer of protection to any of several other policies that might be carried, including General Liability, Employer’s Liability, and Hired and Non-owned Auto Liability policies. For example, someone who has $1 million in General Liability coverage and a covered claim is settled for $1.5 million, this policy would pick up the $500,000 not covered by the General Liability policy.

Added benefits of umbrella insurance

The main benefit of purchasing business umbrella insurance, rather than opting for higher limits on existing policies, is that the insurance tends to be more cost-effective: a company can spend less each month on premium payments and enjoy significantly greater insurance protection. In addition, coverage limits can be expanded on several policies through a single umbrella policy. For instance, instead of investing in higher limits on General Liability, Auto Liability, and Employer’s Liability policies, the company could invest in a single umbrella liability policy that offers extended coverage on all three.

This insurance is generally the most affordable way to get higher policy limits on several other small-business insurance policies (the alternative being to raise the limit on each of the other existing policies individually). However, as a business owner should note, this type of policy will not extend coverage limits on an Errors and Omissions or Professional Liability policy.

Deciding on the need for an umbrella policy

Businesses are constantly changing and the marketplace is often unpredictable which often opens a business up to new exposures. Business owners must continue to take risks in order to thrive and grow, and risks inevitably lead to the possibility of errors, which can lead to lawsuits. Liability losses can occur at any point in a company’s lifecycle. Excess umbrella is the best-case scenario when a judgment goes beyond the limits of the insurance currently in place.