3 Liabilities Umbrella Insurance Covers

The modern business landscape is ever-changing. As a business owner, you want to make sure that you’re staying ahead of your competition and adapting to the needs of your customers.

And along with these efforts, it’s also vital to manage risks effectively. For many businesses, one lawsuit is all it takes to bring everything to a grinding halt. Commercial umbrella insurance is here to give you the cost-effective boosted protection you need for various liabilities.

So what does umbrella liability insurance cover? We’ll discuss these and more in this complete guide. Let’s get started!

What Is Commercial Umbrella Insurance?

True to its name, umbrella insurance goes above and beyond to shield your business from massive financial loss. Commercial umbrella insurance is the most cost-effective solution that will give your business boosted coverage for various liabilities.

There is a specific set of liabilities that can be boosted by commercial umbrella insurance, such as:

• Commercial general liability
• Employee liability
• And commercial auto liability

We will discuss these covered liabilities in more detail later. But to sum things up, umbrella insurance kicks in where other liability coverages end. Therefore, umbrella insurance is key to protecting your business fully.

How Commercial Umbrella Insurance Works

As we mentioned earlier, commercial umbrella insurance takes over where other liability coverages end. To best illustrate how this works, let’s look into this example:

John runs a contracting business that does home renovations. He has an insurance bundle with commercial general liability (CGL) insurance and commercial auto insurance. To protect his business from further risks, he recently got a commercial umbrella policy as well.

His policies have the following coverage limits:

• CGL = up to $1 million per occurrence (costs
• Commercial auto insurance = up to $1 million per occurrence
• Umbrella insurance = up to $1 million per occurrence

In the event that one of John’s commercial vehicles gets involved in an accident that resulted in wrongful death, the total settlement could go over $1 million. In this case, umbrella insurance will take over where his commercial auto insurance ends.

The same process applies if the lawsuit is related to commercial general liability. This can involve physical injury within premises, advertising injuries, and physical injuries connected to business operations. To learn more about the full scope of liabilities covered by umbrella insurance, head over to the section on what does umbrella liability insurance cover.

Why Your Business Needs a Commercial Umbrella Policy

Cost-Effectiveness & Boosted Coverage For Different Liabilities

As you can see from the earlier example, the umbrella insurance policy can boost other policies, giving an additional coverage of $1 million or more. This is what makes umbrella insurance so versatile and cost-effective.

And in the event that major loss is incurred from commercial general liability, commercial auto liability, or employee liability, the added coverage given by umbrella insurance will be a life-saver for your business.

To learn more about covered liabilities, head over to this section: what does umbrella liability insurance cover?

Broader Protection

In addition to the above, umbrella insurance policies generally have broader definitions for physical injuries and advertising injuries. This means that what may not be covered in commercial general liability may be covered by umbrella insurance. However, this depends on which commercial umbrella insurance policy you get and on the unique scenario that you are faced with.

What Does Umbrella Liability Insurance Cover?

Umbrella liability insurance for businesses covers the following liabilities:

1. Commercial General Liability

Commercial general liability (CGL) insurance provides coverage for the following situations:

• Third-party injuries that occur within your business premises
• Injuries or illnesses connected with your products, services, or business operations
• Damage to third-party property
• Reputational and advertising injuries

The above scope of commercial general liability is also boosted by umbrella insurance. Once your coverage limit for CGL has been reached, umbrella insurance can take over for claims related to the above liabilities.

2. Commercial Auto Liability

Commercial auto liability coverage protects your business when your commercial vehicle is at fault for a road accident. If the accident results in bodily injury or property damage, this type of coverage will protect you from financial loss.

However, if the injury or property damage is severe or if the accident results in wrongful death, you will likely need the boosted coverage of umbrella insurance.

3. Employee Liability

In the event that your employee becomes ill, injured, or deceased while on the job, this could result in an employee liability lawsuit. Employee liability coverage is typically under workers’ compensation insurance. And where workers’ compensation insurance ends, commercial umbrella insurance takes over.

The boosted coverage given by umbrella insurance is particularly beneficial for businesses in high-risk industries.

What is Not Covered By A Commercial Umbrella Policy?

Though umbrella insurance covers a wide scope of liabilities, the following are typically not covered:

Professional Liability

Most commercial umbrella policies do not cover professional liability. This means that lawsuits related to malpractice and negligence won’t be covered or boosted by umbrella insurance. These risks are solely covered by professional liability insurance or errors & omissions insurance.

Commercial Property Insurance

Though accidental damage to third-party property is covered by umbrella insurance, damage to one’s own commercial property typically isn’t included. This means that damage to the office, storage space, store, and so on are not covered by umbrella insurance. These risks are solely covered by commercial property insurance.

Get Personalized Insurance To Protect Your Business

That wraps up our article on commercial umbrella insurance and what does umbrella liability insurance cover. If you’re wondering how umbrella insurance or other types of insurance can protect your business, we’re here to help.

KASE Insurance is a commercial insurance brokerage firm in Ontario. We specialize in putting together customized insurance plans for a broad array of businesses. We do this by carefully assessing each business’s risks and matching these risks with tailor-fit insurance solutions.

If you’re still not sure if you need umbrella insurance to boost your liability coverage, our team of experts can give you a conclusive answer based on the unique needs of your business. We can also provide assistance with a host of other insurance needs.

So if you want to take the next step to hassle-free and airtight insurance, reach out to us today!