Who Needs Umbrella Insurance Coverage?
Are you looking for an extra layer of protection in case of a large claim against your business? If so, you may want to consider umbrella liability insurance.
Umbrella insurance can be purchased separately from other business insurance policies and provides additional coverage if you’re ever faced with a large claim against your company. Read on to learn about the benefits and considerations of investing in umbrella liability insurance.
What Is Business Umbrella Liability Insurance?
Umbrella insurance is a type of liability insurance that provides additional coverage when other liability policies, such as general liability or auto insurance, have reached their maximum limit. It’s designed to protect businesses from potential losses due to claims made against them by third parties, such as property damage or personal injury. While individuals often use umbrella policies, companies frequently purchase them as an add-on to their general liability policies.
Umbrella policies are typically purchased in increments of $1 million and can be bought in larger amounts depending on the company’s needs. The policy will cover any costs related to a claim that exceeds the coverage provided by other liability policies.
For example, if a company is sued for causing injuries to a customer who purchased one of its products, the general liability policy would pay for the damages up to the policy’s limit. The umbrella policy would then cover additional costs after the general liability policy has reached its limit.
Who Needs Umbrella Insurance Policies?
Umbrella insurance is recommended as a supplemental policy and can cover you in areas where your primary policies don’t. If you own property, hire employees, or provide customer services, it’s likely that your current business insurance policy will not meet the coverage needs for every exposure.
Many businesses are at risk for large legal claims, even if they haven’t done anything wrong. For example, construction, manufacturing, and hospitality organizations often face higher chances of being sued due to negligence or unsafe practices. These situations require additional insurance coverage; umbrella insurance is usually a great solution.
The Benefits of Umbrella Policies
Umbrella insurance is an additional protection layer that gives business owners extra peace of mind. It provides coverage for liability claims and damages that typically aren’t covered by other policies, such as general liability insurance and workers’ compensation. It also serves as an extra buffer to protect you if a lawsuit results in costly legal fees, court costs, and settlement payments.
Umbrella insurance can also provide additional protection against claims that could exceed the liability limits of your other insurance policies. For example, if a worker slips and falls in your store, their injuries might be severe enough to warrant a significant settlement. If the injuries resulted from your store’s negligence, an umbrella insurance policy would help cover the costs associated with the claim.
To summarize, the primary benefits of umbrella policies include:
- Extra liability protection
- Liability coverage for claims that exceed the limits of other policies
- Coverage for certain types of claims not included in other policies
- Protection for assets against certain lawsuits
- Help protect your reputation in the event of a lawsuit
Have you secured an umbrella policy at the best possible price for your objectives? NEC Insurance applies over 45 years of knowledge to help small businesses to find umbrella coverage and other business insurance policies that offer the best value and coverage that exceeds your expectations.
What Is Covered by an Umbrella Policy?
Umbrella insurance typically covers claims arising from bodily injury, property damage, libel, slander, and other civil wrongs (torts). An umbrella policy may also provide additional protection for certain contractual obligations, punitive damages, and personal injury claims. The typical coverage offered by an umbrella policy is in addition to that provided by a standard liability insurance policy.
Common Umbrella Insurance Claims
The following is a list of some of the most common examples of what would fall under an umbrella policy:
Punitive Damages are awarded in response to intentional torts and are designed to punish the wrongdoer. Punitive damages can be significantly higher than actual damages because they’re not intended to compensate victims but to deter intentional misconduct.
Property Damage costs are any damages to property owned by someone else, not you, due to an accident or incident. They include repair costs, replacement costs, and legal defense fees if the property owner chooses to pursue a claim against the responsible party. You may be held financially responsible for these costs if you’re at fault for damaging someone else’s property.
Contractual Liability costs are any legal fees and other expenses (including consequential damages) that the insured may incur due to a breach of contract. This would include damages for breach of contract, attorney’s fees, court costs, and other related expenses incurred in defense of an action brought by a third party in connection with a breach of contract.
Personal injury costs are any medical bills, pain, lost wages, emotional distress, etc., that the injured party may have incurred due to an accident or incident. Personal injury cases vary in complexity and severity. Regardless of the case’s specific facts, it’s important to remember that personal injury law is based on the idea that one person caused harm to another without just cause.
Advertising Liability costs are any legal fees or other costs the insured may incur due to false, misleading, or unauthorized advertising. This includes damages for libel, slander, and copyright infringement incurred by the insured due to false or deceptive advertising in any medium (such as television, radio, newspapers, and billboards).
It also includes damages incurred by the insured due to claims by third-party advertisers (such as coupon mailers) who state that their product is being advertised for free when it’s not.
Defamation of Character
Defamation of Character costs are any legal fees or other charges that the insured may incur due to defamation of character. This can include damages for libel, slander, and invasion of privacy. These damages can be awarded without proof if the plaintiff proves that the defendant acted with reckless disregard for the truth or falsity of the published matter.
Bodily Injury Costs
Bodily Injury costs are any pain and suffering, lost wages, medical expenses, legal defense fees, etc., that the injured party may have incurred as a direct result of an accident or incident. Bodily injury costs are generally divided into three categories:
- Economic damages (medical bills, lost wages)
- Noneconomic damages (pain and suffering, emotional distress, loss of enjoyment in life)
- Punitive damages
Explore Your Options for Umbrella Policies With NEC
As a seasoned insurance company, NEC Insurance understands the importance of having the right kind of protection in place. Our team of experienced professionals works with you to select the best umbrella insurance policy for your business. Our insurance agents are dedicated to helping you get the umbrella coverage you need at the best price, so you can rest assured knowing that your business is protected.
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NEC Insurance supports Missourians with high-quality coverage for businesses and individuals. We apply over 45 years of experience to help you navigate the market and deliver the policies you deserve.