Investing In Umbrella Insurance

Commercial     by Preferred Insurance

Should I invest in a commercial umbrella policy for my small business?

What does an umbrella policy cover? Well, most policies provide you with an extra $1 million in coverage should you need it.

Are you looking into maximizing your insurance coverage and investing in an umbrella policy? We’d like to applaud you for thinking ahead. In the case you have a claim that is bigger than you imagined, an umbrella policy can be a lifesaver. 

Simply put, umbrella policies protect you when your claim exceeds limits

You get insurance to protect your assets when some sort of emergency or unforeseen event occurs. But, sometimes, whatever claim it is will exceed the limits of the policy. Say, for example, your policy has paid out $1 million for a claim, which is the maximum the policy offers. But, unfortunately, you’re still liable for another $100,000. You would be liable to pay for that yourself in this case. However, if you had a commercial umbrella policy, it would kick in and cover the remaining amount you are liable for.

As you can imagine, in a real-world scenario this can be extremely relieving and has the potential to save your business if something were to happen and your primary policy didn’t cover all of the liability you incurred. 

So, how much is an umbrella policy?

[click_to_tweet tweet=”Most small businesses can expect to pay between $500 and $1,500 annually, however, some policies may be more than $2,000. #preferredinsurance #umbrella #coverage” quote=”Most small businesses can expect to pay between $500 and $1,500 annually, however, some policies may be more than $2,000.” theme=”style5″] Most policies offer $1 million in coverage, with a $2 million aggregate. That means you can get up to $1 million per claim, with up to $2 million for all claims made within that year. 

Your companies industry will be the main deciding factor in how much your policy will cost. Business consultants and construction contractors have some of the highest premiums. That’s because their work is done on somebody else’s property–which gives them a heightened risk of liability claims. For example, bodily injury or property damage. 

What an umbrella policy will not cover

There is a reason it’s called an umbrella policy. The basic concept is that it covers your existing or underlying policy, so in the case of gaps you will be covered. But, it also doesn’t cover everything and there are some circumstances in which your umbrella policy would not kick in. 

Things an umbrella policy won’t cover:

  • Property Insurance claims
  • Errors and Omissions/Professional Liability Insurance claims
  • Expenses that are already covered by an underlying policy

It is also important to note that umbrella policies aren’t their own policy. If you don’t have an underlying policy, you can’t use an umbrella policy for a claim. To use an example, if you don’t have general liability and someone trips on your property and they end up suing you for $700,000 dollars, you can’t use the umbrella policy. However, if you had general liability which covered $500,000, you could use the umbrella policy to cover the remaining $200,000. 

So, do I need an umbrella policy?

As a general practice, there are a couple of kinds of businesses that could really benefit from the security of an umbrella policy. 

These include businesses who:

  • Have commercial property open to the public
  • Conduct business on other people’s property
  • Have their employee’s use their personal cars 
  • Have clients’ who require high coverage requirements

When all is said and done, if you have the risk exposures listed above, an umbrella policy may be right for you. 

At Preferred Insurance Center, our goal is to learn about you, your life, your family, your business, and then make sure you’re protected in the case of an emergency. 

Are you wondering if an umbrella policy is right for your business? We’d love to help you determine whether it’s a good option for you. Call us at 419-678-2326 or shoot us an email at We’re looking forward to hearing from you.


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