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If you run a business that is at risk of lawsuits from employees, customers or third parties, you need to think ahead to ensure that a costly claim doesn't destroy your business. Commercial umbrella insurance, which is becoming increasingly popular, allows you to add coverage to your existing policies at a very affordable price. An umbrella insurance policy will not only increase your coverage but also expand the range of claims and liabilities covered by your insurance policy. In the sections below we explain what commercial umbrella insurance is, how it works, and what it does and does not cover. We outline expected premiums and how to compare policies, followed by reviews of the best commercial umbrella insurance companies, including the three listed below.
Who Has The Best Umbrella Insurance Policy
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What Is Umbrella Liability Insurance And Do You Need It?
Most businesses choose a variety of insurance policies to protect their reputation and revenue in the event of legal action being taken against them. Each policy purchased has its own and aggregate limits, which can be exhausted by a costly lawsuit. Business umbrella insurance provides an additional level of protection in case a business exceeds the limits of one or more basic insurance policies.
Commercial umbrella insurance is purchased when anticipated legal expenses or contractual claims exceed the limits of your existing insurance policies. It is used for general liability, employer's liability, commercial vehicle insurance or leased and non-owned vehicle insurance, benefiting both large and small businesses.
Commercial umbrella insurance should not be confused with personal umbrella insurance, which only applies to individual plans such as auto, boat, or homeowner's insurance. Commercial umbrella policies are designed for business owners and cover claims for property damage, workplace injury and/or advertising injury. Simply put, commercial umbrella insurance provides additional coverage when the limits of your current general liability, employer's liability or commercial vehicle insurance are exceeded.
As a reminder, general liability insurance covers third-party claims for bodily injury or property damage that occur in your business or as a result of your business activities. Commercial umbrella insurance differs from general liability insurance in that it is intended to replace general liability insurance (as well as other coverage).
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Commercial umbrella insurance is often confused with excess liability insurance, and it's important to be aware of the differences between the two types of coverage. Additional liability insurance provides additional coverage that exceeds the initial policy limits, but is intended to increase the limits of a single basic policy. For example, if your general liability policy is limited to $1 million per occurrence, an additional $1 million in reimbursement will cover a lawsuit that costs $2 million. In this situation, you cannot change the terms of your basic policy by adding excess liability coverage. The excess cover fulfills all the conditions of the original policy. If the original policy does not cover claims made abroad, for example, there will be no excess policy.
Commercial umbrella insurance, on the other hand, extends the terms and conditions of your basic policies while increasing the coverage limits applicable to them. An umbrella policy can extend coverage to cover claims or situations not covered by the basic policy. For example, you can extend the terms of your policy to cover claims made overseas. Umbrella policies operate under their own terms and offer more coverage than basic policies. However, if you plan to use commercial umbrella coverage for a claim not covered by your base policy, expect to pay an initial SIR or self-insured retention fee.
The main differences between commercial umbrella insurance and excess liability insurance lie in the extent of the underlying policies that can be applied and the terms and conditions that each adheres to. Excess liability insurance applies to one policy (usually general or professional liability), while umbrella insurance applies to multiple policies, such as general liability, employer's liability and car insurance. Additional liability adheres to the terms and limits of the basic policy, while umbrella insurance has the power to extend the terms and cover additional claims not covered by the original policy. One of the advantages of some umbrella insurance plans is that they can be used to extend the limits of the underlying policy purchased from another company.
Note that some insurers may use the terms "umbrella insurance" and "excess liability" interchangeably. Because of the small but very important differences between these two types of rules, it is very important to read the fine print and fully understand both options before deciding on one.
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Commercial umbrella insurance comes into play when you need to extend the limits of your existing general liability, commercial vehicle or employer's liability policy.
Consider this scenario: One of your employees loses control of a company vehicle in the parking lot of another business, damages the front entrance, injures himself, and injures someone standing at the front entrance. The resulting claims against your business can include property damage, personal injury and your employee's claim for damages. Both medical bills and the cost of property repairs can significantly exceed the limits of your existing insurance policies. Commercial umbrella insurance covers additional expenses within insurance policies.
Here's another scenario: Let's say your new contract with your largest client requires you to have at least $3 million in liability insurance to close the deal. If your current limit is $1 million, you'll need umbrella insurance to cover the remaining $2 million. This is common when working with large businesses in high-risk industries such as construction. Additional coverage with umbrella insurance is often cheaper than increasing basic insurance limits. Umbrella insurance also covers losses and claims not covered by your basic policy, making it a very effective choice to protect your business.
As with other types of insurance, the premium or monthly cost of your insurance depends on how much umbrella coverage you purchase, your location, and risk factors. Instead of paying a deductible before coverage begins, umbrella insurance plans require you to pay a self-insured retention (SIR). This fee only applies when you need a new umbrella policy to cover claims excluded from your basic policy and must be paid before your insurance provider starts paying.
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Umbrella insurance covers three main components of your business insurance. What makes umbrella policies universal is their ability to cover multiple policies at once.
Public liability insurance covers claims related to property damage and bodily, personal or publicity damage caused by third parties in your business or as a result of your business practices. Physical injuries can include anything from slip and fall scenarios to injury due to a defective product. Bodily injury claims include expenses such as medical bills, physical therapy, nursing services, compensation for pain and suffering, or loss of income.
A general liability policy also covers personal injury claims, including damage to reputation caused by defamation. If your business practices negatively affect the reputation of an outside professional, you may find yourself in a defamation lawsuit. Other types of assault charges include defamation, invasion of privacy and false arrest. Expenses due to personal injury include loss of income. An advertising disorder is similar, but focuses specifically on defamation through advertising. If claims made in one of your company's advertisements damage the outside expert's reputation, you are liable for their loss of income.
Property damage is another aspect of general liability insurance. This includes damage and destruction to third party property based on your business or as a result of your business practices. If one of your employees comes to a home to repair a roof and accidentally damages a homeowner's fence, your business must cover the associated repair costs.
How Much Umbrella Insurance Do I Need?
Used by businesses ranging from single to company vehicles, commercial auto insurance typically covers damage to vehicles, property damage caused by vehicles, and injuries sustained in accidents. Physical damage to the vehicle includes collision and extensive damage; The latter refers to non-conflict situations such as storms. Many plans offer uninsured motorist coverage (damage to your car caused by an uninsured driver), the cost of transporting damaged customer merchandise, and damage to the car during towing.
Car insurance covered under an umbrella policy includes rental and non-owned car insurance (HNOA). This refers to the use of vehicles not owned by your business for business-related activities. Leased and non-owned vehicles include cars or trucks your business rents, your and your employees' cars, as long as they are used for clear business purposes. HNOA is a type of liability coverage
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