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Commercial Umbrella Insurance and Why You Should Get One

21 Jul by 5280 Insurance

Anytime you work with a customer or a vendor, you are opening yourself up to possible liability claims if something happens that damages their property or if they suffer bodily injury. For example, if you work with a vendor to help you transport your products, and they were to be involved in an accident while doing so, you might be held liable for the damage or injuries incurred by the third party because of the actions of your vendor.

Liability insurance is designed to protect you from claims made against you due to bodily injury or property damage that you cause to a third party. Therefore, commercial umbrella insurance is intended to protect you if a third party makes a claim that exceeds your personal insurance coverage limits, not to protect you against liability.

What Is Commercial Umbrella Insurance?

Commercial umbrella insurance is an extension of your underlying liability insurance policy. It provides liability coverage above the limits of your underlying policy, often referred to as excess liability insurance or excess insurance.

Umbrella policies are an excellent way to add more protection for your business and personal assets if you need more liability coverage than your liability coverage limits allow. In addition, if you, a family member, or any of your employees need separate coverage, umbrella policies can be purchased to cover all of you.

How Does a Commercial Umbrella Insurance Work?

Commercial umbrella insurance provides you with high liability coverage if you are sued for negligence. 

For example, imagine owning a business that manufactures products and sells them to your customers. During the manufacturing process, you and your employees handle the products and are exposed to chemical hazards. If an employee were injured or became ill after being exposed to one of your products, they might sue you for negligence.

Commercial umbrella insurance would provide you with as much liability coverage as you needed to defend against the claim, up to the policy’s limits. If your umbrella policy has limits of $1 million, for example, it would pay for up to $1 million in legal expenses you incurred to defend against the claim. 

If it is determined that the injured employee was not hurt by the product and their injuries were not related to the product, your commercial umbrella insurance would have no effect.

Instead of purchasing an umbrella policy, you might be able to add an umbrella coverage rider to your current liability coverage policy. That can help ensure that you comply with business insurance regulations in your state while providing you with additional coverage to protect you if you are sued for negligence.

Why Should You Buy Commercial Umbrella Insurance?

Business owners should consider purchasing commercial umbrella insurance because of its additional protection. These policies are often inexpensive and can provide additional funds you might need to defend yourself if you are sued for negligence. It’s important to note that in most cases, you must have underlying liability insurance in place for an umbrella policy to be applicable.

Who Needs Commercial Umbrella Insurance?

Commercial umbrella insurance is often purchased by businesses that саn’t afford to have a lot of dollars on the line if they are sued for negligence. In addition, people who own a business and have a family might choose to purchase an umbrella policy to protect their assets from a lawsuit.

Conclusion

Commercial umbrella insurance is a great way to protect your business and personal assets from lawsuits if you find yourself in a situation where you could be sued for negligence. Keep in mind, however, that purchasing commercial umbrella insurance does not absolve you of any liability for your actions. It merely provides you with higher liability coverage if you are sued.

It’s essential to find the right commercial umbrella insurance policy in Denver to fit your needs. If you need help, 5280 Insurance’s team of experienced, friendly protection insurance advisors are here to help. Call us at (01) 563 4338.

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