Commercial Umbrella Insurance 101

Dominique Dragon |

All business owners in New York need solid, affordable insurance, and many companies require multiple types. But what happens when something goes wrong and your insurance doesn't cover it? If the cost to pay for injury to others exceeds your policy limits, or worse, is excluded by the insurance policies you have, you could be stuck with potentially crippling out-of-pocket costs.

These types of situations can put your business at serious financial risk, and this is where commercial umbrella insurance comes in. As the term "umbrella" implies, a commercial insurance policy can give you extra coverage in a variety of situations, when your regular insurance just doesn't cut it.

What is commercial umbrella insurance?

A commercial umbrella insurance policy is a supplemental policy that comes into play when the cost of damages for which your business is legally liable goes beyond your policy's limits, or when you have reached the maximum payout allowed by your carrier. In some cases liability claims that may not be covered at all by primary insurance policies may be covered by umbrella insurance.

The former type of umbrella insurance is sometimes referred to as excess liability coverage, the latter is often called gap coverage.

You can add commercial umbrella insurance to your commercial auto coverage, worker's compensation, or general liability policy.

Commercial umbrella insurance extends your liability coverage, so it can protect you in a wide variety of situations where you might be held liable for causing damage to a customer's property, injuries that happen at your place of business or during the course of your work, and many other scenarios where you or your business is the liable party, even if the damage or injury happens away from your business premises.

Do you need commercial umbrella insurance?

If you have an insurance policy that makes sense for your business and risk profile, you should be protected in many situations. However, depending on what industry you're in, there's a lot that can go wrong. Just one liability claim that exceeds your policy's limits might be enough to put you out of business so it makes sense to at least consider commercial umbrella insurance as part of your business protection portfolio

Commercial umbrella insurance kicks in after your regular insurance coverage is exhausted, and sometimes reaches down into those excluded situations in many insurance policies, so it's important to look at your primary policies first. A qualified insurance agent can help you to find potential gaps in coverage and decide whether a commercial umbrella policy is right for your business. They can also help you decide where, exactly, to extend your coverage, and by how much.