Liability insurance is one of the most important aspects of a business’ insurance policy. Liability covers accidents and mistakes that could possibly lead to an incredibly expensive lawsuit. There are many types of liability coverages, from bodily injury and property damage liability for commercial vehicles to professional liability insurance for employees.
So what does commercial umbrella liability insurance do?
Commercial umbrella liability policies essentially operate as a backup to your other liability insurance policies. When any of your other liability policies reach their maximum, umbrella insurance sweeps in to take care of the rest.
For example, say your water park’s general liability policy covers $1 million for a single incident. A young boy takes a slide down, but when he flies out, he goes to far and ends up hitting the concrete instead of the water. He ends up with several lacerations, broken bones and even partial paralysis. The boy’s parents then sue your water park for $2 million. Since your general liability insurance policy only covers $1 million, your umbrella liability policy will step in to cover the remaining $1 million.
Coverage Available Under Umbrella Liability Insurance
Umbrella liability insurance can help fill in the gaps of other liability insurance policies such as:
· General Liability: General liability insurance covers claims regarding bodily injury, property damage and personal or advertising injury that occur on the business property.
· Professional Liability: Professional liability insurance covers professional negligence, or mistakes made by a professional that cause a client to lose money.
· Commercial Auto Liability: Commercial auto insurance generally offers compensation for bodily injury and property damage a driver may cause while operating a vehicle owned or used by the business for work purposes.
· Directors and Officers Liability: Directors and officers’ liability, or D&O insurance, covers claims against a director or officer of the business regarding a variety of acts they commit while on the board, including certain HR issues if the policy includes employment practices liability insurance (EPLI).
Umbrella liability insurance will fill in the holes to cover bodily injury, property damage, advertising injury and any other expenses related to a liability claim. It can also help with legal expenses if a lawsuit or settlement exceeds the limits of your basic liability insurance policy.
Lawsuits can be expensive, so make sure that you have the right amount of liability and umbrella liability insurance to protect your business.