Umbrella on white backgroundDo I need Umbrella insurance and what does it cover? This is a very common topic in our office so I thought it would be great to explain it a little in simple terms. We know you are in business to make a profit, but sometimes accidents can occur that have the potential to be devastating to your business financially. Smart business owners usually cover their basic risks with general liability insurance, property insurance, business auto insurance and workers’ compensation, at a bare minimum. However, depending upon your liability concerns, you may need additional protection. This is where Umbrella insurance comes in.

Your basic liability coverage can help to protect you financially when customers have an accident in your place of business or when you cause bodily injury or property damage to others. Liability insurance has set limits for coverage. This means coverage up to the limit specified in your policy.

So what happens if you have a lawsuit that exceeds the amount of liability coverage in your policy? You could pay the excess out of pocket, but in this economy you may not have liquid funds available. So in some cases, that isn’t a realistic option because lawsuits can run into millions of dollars. All to often this can cause a profitable business to close its doors.

The best idea may be to check into a umbrella insurance policy. Should major problems occur, and you need additional liability coverage, your business umbrella insurance can go into effect when your other liability coverage has been exhausted.

Umbrella insurance is usually an inexpensive added policy and is a great way to get excess coverage over your liability exposures. This coverage comes in after your general liability, commercial auto liability and your employer’s liability exposure on your workers’ compensation policy have been maximized.

So like any insurance policy, Umbrella insurance is beneficial to most small and large businesses. It is one more way to protect you and your business.