The basics

What is commercial umbrella insurance?

Umbrella insurance (also known as excess liability insurance) is extra liability insurance designed to protect your business against catastrophic losses. In other words, it’s a policy that boosts the coverage limits of your other business insurance policies.

Who needs umbrella insurance?

If you feel you may be at higher risk for a particular type of incident, it’s a good thing to have. Make sure you understand your insurance policy limits, so you can determine if you may need more coverage.

Your insurance agent can help you with that.

The coverage

How it works

Every insurance policy has limits, and the insurance company will only pay up that amount. After the limits are exceeded, you’re on your own. This is where umbrella insurance comes in.

You can add extra limits to your policies so that if something really expensive happens, your insurance plan will pay more.

Claims example

You were driving on the way to a photoshoot and got in car accident. You injured a mother and child, but luckily your business auto policy covers up to $500,000 of the damages. Still, the total amount you’re responsible for ends up being $600,000. Umbrella insurance can cover the additional $100,000 you need.

Typical home and auto policies only cover up to $500,000. However, 13% of all claims cost over $1 million. That’s where umbrella insurance comes in.

Price factors

How much does commercial umbrella insurance cost?

Many small businesses pay around $632 a year for umbrella insurance or around $57 a month.

Around 56% of small businesses pay less than $1,000 a year for umbrella insurance coverage. That’s not a bad price to pay when you consider the fact that it could save your business in the event of a catastrophic loss.