Find out the benefits of a Commercial Umbrella Policy in Florida
Commercial Umbrella Policy
A commercial umbrella policy provides “extra” coverage over your general liability, property, and business auto policies for a particular business.
What Does a Commercial Umbrella Policy Do?
The best way to answer that is with an example. Let’s say one of your workers was in an accident and they ended up hurting an individual. Furthermore, that individual’s medical bills were $1,000,000! Most umbrella rules mandate that you have $500,000 in business auto medical liability, also known as “bodily injury.” Your business auto coverage would cover the first $500,000 and then the remainder would be up to you! An umbrella policy takes the “YOU” out the scenario and replaces it with the insurance company’s money. If your umbrella was $1,000,000, then the umbrella could easily pay out the remaining $500,000 and your business would not face financial ruin. There are many other scenarios like this that are surprisingly typical, albeit horrific, for everyone involved.
What is covered?
That is a great question! Most umbrellas would respond with the answer, “If it is covered on your underlying policies, it is usually covered on the umbrella policy.” That raises a VERY BIG CONCERN for most umbrellas. A business owner and agent must be on top of things to make sure the entire risk is protected. If a business owner is sued and the base policy—whatever it may be—does not have insurance for it, the umbrella would not respond either!
Frequently Asked Questions
What Coverages Do I Need on My Underlying Policies for the Umbrella to Respond?
All umbrellas typically have a schedule of minimum coverage that the policies must have in order for the umbrella to respond. For a general liability policy, it may be an underlying limit of $2,000,000. For the business auto policy, it may be underlying limits of $500,000 for bodily injury. It is up to you and the agent to make sure you have adequate coverage on the base (or underlying) policies for your umbrella to respond.
What if My Umbrella Policy Requires a Certain Amount of Coverage and I Do Not Have it?
An example would be if your auto insurance has $100,000 in bodily injury and the umbrella states you need $500,000 in bodily injury. How would your umbrella respond? The short answer would be that it would not! Because you did not follow the rules, the umbrella would be under no obligation to respond or defend you. This can lead to MAJOR holes in your coverage.
How Do I Choose the Right Amount of Coverage for Me?
There are many factors. It depends on what you do, the number of employees you have, your fleet of trucks or cars, and what the revenue of the business is. It is not based on any ONE thing. That is a conversation for you and your agent.
Is Anything Excluded?
Yes: anything to do with lead, asbestos, or silica is usually excluded. Also, any act of war or terrorism is usually excluded. Professional liability (errors and omissions) as well as discrimination and employment practice suits are generally excluded as well. This list is not exhaustive but does provide a gauge. You will need to read your own policy carefully to make sure you understand what is covered and what is not.
What if My Umbrella Is for an Amount Lower than a Court Order is Requiring Me to Pay?
Again, take for example a tragic situation. Let’s say a person slipped and fell, hitting their head as they were coming into your place of business, and you were found at fault. Let’s also say that the medical bills totaled $5,000,000. If the umbrella is for $2,000,000 and the underlying policy is for $2,000,000, who would come up with the remaining $1,000,000? It would be the business! That is why it is extremely important to have a conversation with your agent BEFORE something like this happens!