Umbrella insurance for businesses (sometimes called commercial umbrella insurance) is an extra layer of liability protection that can help your business if it is sued for more than the limits of your underlying liability policies.
Whether or not you need umbrella insurance depends on a number of factors, including the size of your company, the nature of your business, the amount of liability coverage you already have, and your risk tolerance.
How much liability coverage do you already have?
The first step in deciding whether you need umbrella insurance is to assess how much liability coverage you already have. Most businesses have various forms of liability insurance, such as general liability insurance, professional liability insurance, etc. These policies typically have limits of liability, which is the maximum amount of money the insurance company will pay out in the event of a claim.
If your current liability limits are not enough to protect your business from a major lawsuit, you may need to consider getting umbrella insurance. For example, if you have a general liability policy with a limit of $1 million, and you are sued for $2 million, your insurance company would only pay out $1 million. The remaining $1 million would be your responsibility to pay.
What is the nature of your business?
Some businesses are more likely to be sued than others. For example, those that operate in the food service industry or the healthcare industry are more likely to be sued for food poisoning or medical malpractice. If your business is in a high-risk industry, you may need an umbrella policy to ensure you have enough coverage.
How much umbrella insurance can you afford?
Umbrella insurance offers cost-effective financial protection for businesses. However, you need to make sure you can afford the premiums.
How much risk are you willing to take?
Ultimately, the decision of whether or not to get umbrella insurance is a personal one. You need to weigh the cost of the premiums against the risk of being sued for more than your current liability limits. If you are not comfortable with the risk of having to pay out of pocket for a major lawsuit, then you should consider getting umbrella insurance.
Benefits of Umbrella Insurance
There are many benefits to having umbrella insurance. Two of the most important are:
- Extra liability coverage: Umbrella insurance can provide extra liability coverage if your underlying liability policies are not enough. This can be a lifesaver if your business is sued for a large amount of money.
- Peace of mind: Umbrella insurance can give you peace of mind, knowing that you are protected in case of a major lawsuit. This can be especially important if you work in an industry where liability lawsuits are common.
How To Get Umbrella insurance
If you are considering buying an umbrella insurance policy, there are a few things you need to do:
- Get quotes from multiple insurance companies. It is important to get quotes from multiple insurance companies to compare prices and coverage options. Many providers enable you to get instant, self-service quotes online. That means you can research umbrella insurance whenever it is convenient for you.
- Compare the coverage limits and deductibles of each policy. Make sure you understand the coverage limits and deductibles of each umbrella insurance policy you consider.
- Learn about the insurance company. You should ask about the company’s experience and its history of paying claims. The last thing you want is to be found liable in a lawsuit and then learn your insurer cannot pay your claim promptly or fully.
Once you have chosen an umbrella insurance policy, be sure to read it carefully and understand the terms and conditions. You should also keep your policy updated with your company’s changing needs.
Conclusion
It is common for companies to be sued. It is also common for those that do not have adequate liability coverage (including an umbrella policy, if appropriate) to take on large financial burdens as a result of lawsuits. And unfortunately, many businesses are forced to permanently close their doors in that situation.
Umbrella insurance can be a valuable asset for businesses of all sizes. If you are concerned about the risk of being sued, you should consider getting an umbrella insurance policy to protect your business.
