What Is Umbrella Insurance, and Why Your Business Needs it
As a small business owner, insurance is an important investment. Having the right coverage can protect you or even your clients from injuries, accidents, or property damage. But what happens when the amount of damage exceeds the limits of your existing insurance policy?
Here’s how a commercial umbrella insurance policy can augment your existing coverage.
Understanding Commercial Umbrella Insurance
What is umbrella insurance? Sometimes called “excess liability insurance,” a commercial umbrella insurance policy extends the coverage of another insurance policy beyond the usual limit.
For example, it’s not uncommon for general liability policies to set limits on how much you’ll receive per claim or over the course of a year. If an accident happens that exceeds this coverage limit, you could be on the hook for things like:
- Medical bills
- Legal expenses
- Property damage
That’s to say nothing of the impact that an accident can have on your public reputation. Because it extends the coverage limits of these policies, umbrella insurance gives you a greater level of protection.
How Does Umbrella Insurance Work?
To qualify for umbrella insurance, you must first have another insurance policy in place. The umbrella insurance policy will kick in once you’ve exhausted the coverage limits on the underlying policy.
As with any insurance product, business owners will pay a monthly premium. However, depending on your insurance provider, this premium may be lower than if you’d simply paid for an underlying insurance policy with a higher coverage limit. As a result, business owners may be able to pair affordable business insurance with umbrella coverage to minimize overhead costs.
Do I Need Umbrella Insurance?
If you already have robust insurance coverage, then umbrella insurance may not be strictly necessary. However, in many cases, umbrella coverage can be an important asset. Here are some reasons business owners might consider umbrella insurance for their company.
Your Business Is Growing
As your business grows, you’ll have more assets to protect. Your current insurance coverage may not adequately scale at the same pace as your business. When this happens, an umbrella insurance policy can provide greater coverage and increased flexibility.
Your Business Is High Risk
Some businesses face greater levels of risk than others. For instance, builders and contractors face greater chances of accidents, injuries, or damage to their clients’ property. Umbrella insurance can extend your coverage so that you and your clients experience maximum protection.
You Want to Control Overhead Costs
Businesses face challenges when it comes to controlling overhead costs. High insurance premiums can put a serious dent in your cash flow. One way to control these costs is by purchasing a more affordable insurance policy and supplementing this plan with additional umbrella coverage. Depending on your providers, you may be able to achieve greater coverage while keeping your costs manageable.
How to Afford Umbrella Coverage
How can you create space in your budget for umbrella insurance? Business leaders can work to minimize other overhead costs to pay for additional insurance premiums. For instance, adopting a dual pricing model from Simpay will help you mitigate credit card processing fees. These savings can be reallocated to other areas of your business, including your insurance coverage.
