A business umbrella policy facilitates an extra layer of liability protection on existing coverage on your commercial policies such as business liability or commercial auto insurance. Commercial umbrella coverage applies only for your business operations and business premises while personal umbrella policies facilitate extra liability coverage for individuals and families.
Now the main question is: do you need a business umbrella policy?
No matter the size of your business or your business sector, accidents are unavoidable. It is important of course to take the right measures to prevent accidents in the workplace but there is only so much prevention can do. Perhaps your business has exposure to some escalated catastrophic risk?
It is safe to say simply because of this fact that all businesses would benefit from an umbrella policy, some businesses are at a higher risk of accidents than others. Businesses that are open to the public have a greater liability risk because of the foot traffic and need extra liability coverage. If you conduct your business on someone else’s property (construction contractors, landscapers, janitors, on-site auto repair, carpet cleaners, in-home LMTs, personal trainers, etc.), you are also at a higher liability risk and an umbrella policy could be a good idea to protect your business and your livelihood.
The size of your business should not indicate that you might not need an umbrella policy. A lawsuit could put a small business out of business and therefore you could argue that small businesses would benefit the most from the extra liability coverage.
The cost of business umbrella policies
There are several factors that determine the cost of business umbrella policies. The coverage limit is obviously the main indicator. The initial premium for the first $1 million limit is a set cost. However, you could obtain additional coverage for a fraction of the initial cost, so it is always wise to request quotes for higher limits before deciding definitely, or definitely not. Use the experience of your agent to facilitate claims scenarios from their history of working with the public. Sometimes these examples hit close to home but sometimes they clearly bolster a believe that your business is very safe without extra liability protection.
Your industry is also a big factor. Some industries are simply are considered higher risk by insurance companies. Although the cost for these industries is higher, the need is also higher due to the higher rate of accidents and in some cases deaths.
The size of your business also affects the rate. The more clients you have and more foot traffic, the higher the risk.
You can however offset the cost of a business umbrella policy with several discounts companies tend to offer. These discounts vary for each company and industry, so it’s always a good idea to ask. However, the most important discount most businesses receive is on their other existing insurance policies when they add an umbrella policy. These savings could in some cases cover the cost of the additional umbrella policy.