How does a Commercial or Business Insurance Umbrella Policy Protect a Business?
Serving Golden, Denver, Lakewood, Littleton, Arvada, Wheat Ridge and all of Colorado
A commercial liability umbrella policy is designed to protect the assets of the business and its viability. This policy gives the business an additional amount of coverage to pay for a liability claim. And most policies will also pick up attorney’s fees to defend the business in a court of law. This feature by itself is a huge benefit to the client as attorney’s fees are very, very expensive.
How An Umbrella Works
If a business is held responsible for bodily injury or property damage to another business or individual, the business is at risk of losing a substantial amount of money. The underlying (or primary) or underlying insurance policy may cover this liability, but if the limit of insurance is exhausted and still more money is owed to the injured party, the business may suffer a financial blow which puts the viability of the business at risk.
An umbrella policy gives 'additional' or 'excess' liability coverage above the primary General Liability, Commercial Auto or Work Comp policy limits.
Example: A company employee is making a delivery and accidently hits a pedestrian crossing the street. The pedestrian sustains multiple injuries, has several surgeries and is confined in a rehabilitation facility for several months. The business' Commercial Auto policy limit is exhausted, and more money is needed to extend the rehab stay. A commercial umbrella policy provides an additional payout of insurance money until the pedestrian is considered 'healed' or umbrella policy limit is exhausted. If the umbrella limits are exhausted and the injured party is not yet 'healed' the business assets or owners' assets may need to provide additional revenue to the injured party.
Example: A child ingests a brightly colored bath bomb and becomes extremely ill due to ingesting toxic ingredients. The company is found liable and has to pay the medical bills of the injured child now has permanent liver disfunction and other secondary complications. The General Liability policy provides; a payout up the limits of insurance on that policy (usually $1million or $2million) and then (if purchased) a commercial umbrella policy would provide an additional limit of insurance.
Other Notes on Commercial Umbrella Policies
- Some policies will act as primary coverage in some instances.
- The policy may or may not pay for defense costs which can be substantial.
- Make sure to list all underlying business owned insurance policies on the umbrella such as your commercial auto, work comp, employment practices liability, etc.
- Make sure to carry the minimum required underlying limits of insurance on the underlying policies.
- Read the policy 'exclusions'. These are the things the policy will not ever cover
If your business is located in the Denver area, Golden, Lakewood, Arvada, Wheat Ridge, Littleton, Evergreen or anywhere in Colorado and has built up equity, a liability umbrella policy is a particularly important policy to purchase. Call us at 303-960-5290. We are happy to evaluate the needs of your business.