What Is A Commercial Umbrella Insurance Policy? 

A commercial umbrella insurance extends the liability coverage limits of your existing business insurance policies, such as general liability and commercial auto. It offers crucial financial protection by covering claims that exceed your primary policy limits, ensuring your business remains safeguarded against unexpected large claims.

Why Is A Commercial Umbrella Policy Important?

In today’s litigious environment, businesses face the risk of large lawsuits that could surpass the limits of their primary insurance policies. A commercial umbrella insurance policy is essential for protecting your business from substantial financial losses that could arise from unexpected and significant claims.

For example:

1. Customer Injury: A customer sues your business after slipping and falling on your premises, leading to a claim that exceeds your general liability coverage.

2. Vehicle Accident: A company vehicle is involved in a severe accident, and the resulting legal and medical expenses surpass your commercial auto liability limits.

3. Product Liability: A product defect causes harm, leading to a costly lawsuit that exceeds your product liability insurance limits.

Excess Liability Insurance Vs. Commercial Umbrella Insurance

Excess liability insurance and commercial umbrella insurance both serve to extend the coverage limits of your existing insurance policies, but they do so in slightly different ways:

Excess liability insurance is designed to provide additional coverage once the limits of your underlying policies, such as general liability OR commercial auto insurance, have been exhausted. 

However, excess liability insurance strictly follows the terms and conditions of the underlying policy. It simply increases the coverage amount available under the same conditions as the primary policy. 

For example, if your general liability policy covers up to $1 million and you have an excess liability policy for $2 million, you would have a total of $3 million in coverage for claims that fall within the scope of your general liability policy.

Commercial umbrella insurance, on the other hand, not only increases the coverage limits but can also broaden the scope of your protection. This means it may cover certain types of claims that happen under more than one policy, providing more comprehensive protection. 

For example, if a claim arises that exhausts the limits of more than one liability policy, an umbrella would kick in to offer coverage for both of those policies. Where an excess liability policy would only extend the coverage limits for one policy.

Think of it this way, excess extends one while an umbrella covers more than one.

The Huneycutt Group Insurance Agency specializes in Commercial Liability, Commercial Umbrellas, Commercial Vehicles (and, commercial truck), Workers Compensation, Professional Liability, and Commercial Inland Marine.

It’s important to remember that the specific types of commercial insurance you need will depend on your business’s nature, size, and industry. 

We will assess your unique needs and tailor an insurance plan that provides comprehensive coverage for your unique business.

Is Commercial Umbrella & Excess Liability Required In North Carolina?

While it’s not legally required for businesses in North Carolina to have commercial umbrella or excess liability insurance, it’s highly recommended. These policies provide an essential financial safety net, especially for businesses that could face significant liability claims exceeding their standard coverage limits.

Who Is A Commercial Umbrella Insurance Policy For?

A commercial umbrella insurance policy is ideal for any business that needs additional liability protection beyond what their primary policies offer. It’s particularly beneficial for businesses in high-risk industries, those with significant assets, or those frequently interacting with the public. This policy ensures that your business is covered in the event of a major claim.

What Does A Commercial Umbrella Policy Cover?

A commercial umbrella policy typically covers a range of liability claims. This policy provides protection when your primary insurance policy limits have been reached, ensuring that your business is not left vulnerable to financial losses from large claims.

Bodily Injury Liability

A commercial umbrella policy covers claims related to bodily injuries that occur on your business premises or are caused by your business operations. This includes medical expenses, legal fees, and any settlements or judgments that exceed the limits of your primary liability policy.

Legal Defense Costs

In the event of a lawsuit, legal defense costs can quickly add up. A commercial umbrella policy covers these costs once your primary policy limits are exhausted, ensuring that your business can afford adequate legal representation.

Personal and Advertising Injury

If your business is sued for claims like defamation, libel, slander, or copyright infringement, a commercial umbrella policy provides additional coverage beyond your primary policy limits, covering legal fees and damages.

Product Liability

For businesses that manufacture, sell, or distribute products, a commercial umbrella policy offers extra protection in the event that a product causes harm or injury. This coverage kicks in when claims exceed the limits of your product liability insurance.

What Factors Affect The Cost Of A Commercial Umbrella Policy?

Several factors influence the cost of a commercial umbrella insurance policy. These include:

Business Size and Industry

Larger businesses and those operating in high-risk industries tend to face higher premiums due to the increased likelihood of substantial claims.

Coverage Limits

The amount of coverage you select will directly impact the cost of your policy. Higher coverage limits typically result in higher premiums.

Claims History

Businesses with a history of frequent or large claims may see higher insurance costs as they are viewed as higher risk by insurers.