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What is Commercial Umbrella Insurance and What Aspects of My Business Does it Cover

No matter what type of business you have, there are certain liabilities. Although you have business and property insurance to help protect against legal action, commercial umbrella insurance provides an extra layer of protection in the event the costs are more than your other insurance policies cover. Having umbrella insurance helps protect your commercial assets and protects your bottom line in an affordable way. If you would like to find out how commercial umbrella coverage can protect your business, Meyer Insurance can discuss the options.

Commercial Umbrella Insurance Coverage

One of the questions you may have is, what does commercial umbrella insurance cover? It helps cover costs that are covered by your business liability insurance. 

This includes claims of property damage or bodily injury, such as:

  • Medical bills
  • Attorney and other legal expenses
  • Repair costs
  • Judgments and settlements 

Some of the most common liability issues that small businesses face include vehicle accidents, reputational harm, product liability, and customer injury. Businesses that deal with heavy machinery, interact with clients in person, or whose employees work offsite should definitely consider commercial umbrella insurance, as liability risk is high. 

Without umbrella coverage, if the costs associated with a claim exceed the business’s general liability or commercial auto insurance coverage, the owner is responsible for paying out of pocket. This includes using business and, possibly, personal assets to make up the difference. For small businesses, especially, this can result in a major financial hit that may be difficult to recover from.

What Umbrella Insurance Does Not Cover

Having umbrella coverage does not protect a business owner from all claims. It does not extend the limits of several types of policies, such as commercial property insurance. For example, if a fire or tornado damages your property and commercial equipment, and the costs to repair and replace are more than your property insurance limit, you would have to pay those expenses out of your own pocket.

Commercial Umbrella Insurance Limits and Costs

You cannot have umbrella insurance without a general liability policy, as it is an extension of general liability. If you do not have general business liability coverage, you will need to purchase that policy before adding an umbrella to it. 

When adding commercial umbrella insurance in South Dakota, you can choose how high of a limit you want, based on your liability risk and budget. Typically, aggregate limits range from $1 million to $15 million. These limits are the maximum amounts that your insurance company will pay if you have expenses that extend past your other liability policies.

In regard to costs, a commercial umbrella insurance policy is relatively affordable. Usually, a general liability policy is the main expense. On average, adding $1 million in umbrella coverage may only cost a few hundred dollars. However, insurance companies take into consideration a number of factors when determining the costs of this additional policy. 

These factors include:

  • Business type
  • Amount of coverage
  • Size of the business
  • Industry liability risk  

Additional Liability Coverage Options

A business should have as much liability coverage as possible. Although commercial umbrella coverage is an important one, there are other liability insurance options that a specific business may want to consider. For example, if employees use their own vehicles for business use, the owner may want to add non-owned auto liability coverage. 

Other insurance coverage options include:

  • Directors and officers liability – covers defense costs for a board director or officer
  • Fire legal liability – protects against fire liability in your leased space
  • Employment practices liability – protects against lawsuits brought on by your employees
  • Liquor liability – provides injury claim protection in the event you serve alcohol during business operations

Get a Quote from Meyer Insurance

If you own a business in South Dakota, and you do not currently have commercial umbrella coverage, or you want to increase your limit amount, make an appointment with Meyer Insurance. One of our team members can take a closer look at your business and your specific needs. If there is liability risk, we can outline an affordable strategy to best protect your assets and fit your budget. 

As an independent agency, Meyer Insurance can receive quotes from a variety of insurance companies, which gives you more options and the best price. Contact us for a commercial umbrella policy quote for your business.