What is a Business Umbrella Policy?

There is a straightforward answer to this question. Business umbrella coverage works just like an umbrella in the event your company faces a lawsuit and your regular business insurance policy does not sufficiently cover that claim on its own. For example, your company is sued for $1 million dollars. Your existing coverage limit is $750,000.00. Your company needs to come up with $250,000.00 to make up the difference.

How Will My Company Handle Such Expenses?

If you are a small business owner you are probably carrying enough insurance coverage to handle the risks your company faces in the ordinary course of operating from day to day. This amount may not be enough if you were faced with a claim and needed to settle out of court. It is unfortunate, but even if your company has tried its best to operate ethically and safely, things sometimes just happen in life.

If your company was in the position to settle and the amount was $1 million dollars, but your insurance only covered you for up to $750,000.00 in legal claims, do you have the $250,000.00 to pay out of pocket comfortably? If the answer to that question is no, then securing an umbrella policy is your next step. Umbrella policies will pick up coverage usually where your regular insurance coverage types leaves off.

So, in the instance above, your company would not have to come up with the $250,000.00 because your umbrella insurance policy would kick in and cover it for you. The best part is, when you plan ahead and get the best coverage you can, your umbrella coverage may be $500,000.00. Even with the $250,000.00 being put towards a settlement, your company would still have remaining coverage left over.

Should I Get Umbrella Insurance?

That is a question you need to consider carefully. After all, you purchased your existing coverage by taking into consideration a lot of things. Your budget was probably one. The amount of risk your company assumes in functioning each day was probably another. However, you will want to go over your specific situation with an insurance professional before you buy your umbrella policy.

Certain kinds of liabilities will not be covered by an umbrella policy. In general, professional liabilities are not covered. This means if your company or firm is facing a claim of negligence or damage caused by professional advice provided to a client you will not be able to benefit from umbrella-type insurance. Like most insurance there are some exclusions to the coverage.

Before you purchase an umbrella insurance policy you need to find out if it makes sense to do so. There is no use in purchasing the coverage if it will not help your company in the long run. Also, it does not make sense to do without the coverage if your company is large enough or engaged enough in risky operations that warrant being unable to afford to go without umbrella insurance.

If your company has a lot of assets, you probably want to check to make sure your existing coverage is adequate. After all, in the event of a successful lawsuit your company assets could be at risk. Do not take a chance and spend less on insurance now, when it could cost you your business in the future.

If your company is small and operates out of your home, you may need to seriously consider getting umbrella coverage. Your home itself is a business asset which could be vulnerable. It makes sense no matter what your situation to find out if an umbrella insurance policy is right for you.

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