Why do you need a commercial umbrella policy?

As its name implies, a commercial umbrella insurance policy provides additional coverage amounts over your current business insurance. Similar to excess liability insurance, umbrella liability insurance kicks in when the cost of a liability claim goes beyond the coverage limits of liability policies like:

• General liability insurance
• Workers’ compensation insurance (specifically employer’s liability insurance)
• Hired and non-owned auto insurance

Umbrella insurance is not a separate policy – you add it to policies you already have. Any small business could benefit from commercial umbrella insurance. Accidents can happen at any company, and the limits of a standard liability policy won’t cover all the costs of a catastrophic liability claim.

An umbrella liability policy provides an added layer of liability protection to your underlying coverage. The most expensive types of lawsuits cost millions and typically involve a serious injury or auto accident. With umbrella coverage, you’re protected from devastating legal fees that could potentially bankrupt your business.

Umbrella insurance covers lawsuits that exceed the limits of your commercial general liability, employer’s liability, and hired and non-owned auto insurance policies. When a lawsuit drains the underlying policy limits, umbrella insurance steps in to protect your assets and income.

You can also add excess liability insurance to your professional liability insurance (also known as errors and omissions insurance or E&O) to boost its coverage. Excess liability insurance supplements one liability policy, while umbrella insurance sits across several policies.

Tech businesses typically purchase umbrella insurance to meet client demands. IT contracts often require you to carry a certain amount of insurance coverage to ensure the client is protected if something goes wrong.

When your liability policy limits are lower than those required by a client, you should definitely consider umbrella insurance.

Commercial umbrella coverage expands the limits of your primary policies. It protects business owners against a variety of liability risks, including:

• Bodily injury or property damage lawsuits brought by people outside your company
• Employees who claim they were injured as a result of your negligence
• Lawsuits stemming from an auto accident

If an accident leads to a lawsuit, an umbrella policy will cover costs that are over and above your liability policy. These could include:

• Legal defense costs
• Judgments
• Settlements

For example, one of your employees gets in a two-car accident driving to visit a client in a rental car. Several passengers in the other vehicle are injured, and your business is sued. The court orders you to pay $2.5 million – but your hired and non-owned auto policy limit is $2 million. An umbrella policy will cover the remaining $500,000 that you’d otherwise have to pay out of pocket.

The average cost for umbrella insurance is $75 per month, or about $900 per year.

Insurance companies usually offer this coverage in $1 million increments, and the cost increases with the policy limit. The higher your policy limit, the more you’ll spend. Most TechInsurance customers buy a $1 million per-occurrence / $2 million aggregate umbrella insurance policy.

Any small business is at risk for accidents, injuries, and lawsuits. The costs of a single large claim can seriously damage your business. Commercial umbrella insurance can provide a safety net that keeps your tech company protected.

Our expert insurance agents can help you evaluate your risks and determine the amount of umbrella coverage that’s right for your business.