Commercial umbrella policies provide an extra layer of protection that builds on the liability coverages in your current policy or policies. This insurance covers the same expenses as business liability insurance, such as medical expenses, attorney fees, and damages when your company faces a lawsuit. Why is this important? Many commercial insurance policies often have liability limits that may be lower than you’d like to protect your business. Not sure? We are here to help. One of our licensed agents can walk you through your options so you can make a decision that makes sense for your business.
Commercial Umbrella Insurance – Frequently Asked Questions
- What is commercial umbrella insurance, and how does it work?
Commercial umbrella insurance provides extra liability protection that goes beyond the limits of your primary policies—like general liability, commercial auto, and employers’ liability. It acts as a financial safety net when a claim exceeds those underlying policy limits. - What types of insurance does an umbrella policy extend?
It typically sits above:
- General liability
- Commercial auto liability
- Employer’s liability (part of workers’ comp)
- Sometimes hired/non-owned auto or other scheduled coverages
- Why would a small business need umbrella insurance?
Even small claims can become large when legal fees, medical costs, or damages are involved. One major lawsuit could exceed your standard policy limits—umbrella insurance helps protect your business and assets from unexpected, catastrophic loss. - How much umbrella coverage should I carry?
Limits typically start at $1 million and can go up in $1M increments. The right amount depends on your business’s size, risk exposure, number of vehicles or locations, and contractual requirements. - Does umbrella insurance cover all types of claims?
No. It only extends the liability limits of your underlying policies. It does not provide coverage for:
- Professional liability (E&O)
- Employee injuries (handled by workers’ comp)
- Property damage to your own assets
- Intentional or criminal acts
- What is required to qualify for commercial umbrella insurance?
Most insurers require you to carry certain minimum limits on your underlying policies (e.g., $1 million in general liability and auto liability) before they’ll issue an umbrella. - How does an umbrella policy “kick in”?
If a claim exceeds your primary policy limit, the umbrella policy begins paying for covered costs up to its own limit. For example, if your general liability limit is $1M and you’re sued for $2.5M, the umbrella can cover the remaining $1.5M (after meeting any retention). - What’s the difference between excess liability and umbrella insurance?
Both provide additional coverage, but umbrella insurance may also “drop down” to cover some claims not included in underlying policies (with a self-insured retention). Excess liability simply increases limits without expanding scope. - Can I cover multiple businesses or entities under one umbrella policy?
Sometimes. It depends on how the businesses are structured and the insurer’s appetite. If you own multiple businesses, discuss this with your agent to ensure proper coverage and scheduling. - Is commercial umbrella insurance expensive?
Not usually—especially for the amount of coverage provided. Premiums often start around $500–$1,500 annually per $1 million in coverage, depending on your business’s risk profile, payroll, vehicle use, and industry.
