A Commercial Umbrella Liability policy is a coverage option that should be seriously considered by any business, regardless of its size. Liability claims and court decisions involving millions of dollars are a reality. Any business can be found legally responsible for crippling financial judgments. A Commercial Umbrella Liability Policy, increasingly referred to as an excess policy, can provide an additional layer of insurance protection to handle major losses.
The coverage form is still not standardized, so this policy may vary significantly among companies, and some jurisdictions may create unique coverage issues. Punitive damages are an example. Some states only permit responsible parties to pay punitive damages; others allow them to be paid by insurers. Commercial umbrellas can also differ widely on the exclusions they contain.
A business owner may consider an accident that does not involve a fatality to be one that can readily be handled by regular coverage. The reality is that such an accident may result in substantial medical care, lost income, and other expenses. Can your business afford a payment that exceeds a million dollars? Think of accidents involving vehicles that, today, are much safer than even five years ago. That means that accidental deaths are less likely while the chance of severe injury has increased. Severe head trauma can send a claim’s cost soaring. It may take up to seven years to determine the ultimate extent of the injury. Recovery is often slow and sporadic. These elements combine to make regular insurance coverage insufficient.
A business may have auto liability coverage, but insurance limits of more than $500,000 are rare because insurers are reluctant to offer higher coverage without sufficient premium. When the insurance coverage provided by a business auto policy is not enough to meet the amount of a loss, the business is responsible for the difference.
An Umbrella Liability policy could be the difference between bankruptcy and an on-going business. The Umbrella policy would take over where the business auto policy stopped, providing defense coverage and additional limits to pay large judgments.
There are no standard Umbrella Liability policy forms; each company has its own variation. Each form offers different options that can help tailor coverage to specific business needs. One thing to remember is that an Umbrella Liability policy will not cover everything; there are exclusions in this form as in any other contract of insurance. However, it still represents an excellent method to help shield a business from catastrophic claims. Contact your Hertvik Insurance Group professional to discuss securing this valuable form of liability coverage. It could help preserve your business.