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As a business owner, you should already have liability coverage that provides financial protection for covering the cost of someone’s medical care or property after an accident occurs. A commercial umbrella policy extends that protection by offering additional financial support in case someone’s lawsuit exceeds what your current policy provides. Knowing what won’t be covered by a commercial umbrella policy helps you decide on the level of coverage you need based upon the anticipated risks at your business along with how you might plan for handling costs that don’t fall under the policy.
Expect to First Use the Underlying Policy
Umbrella insurance policies don’t kick in until the underlying policies have already reached their limits. When dealing with a claim, you’ll first want to rely on your primary commercial insurance policy while being aware of its limits. Once it hits the limit, the umbrella policy will be put into action. Keep in mind an umbrella policy also has limits, which means it won’t pay out any more than what you’ve established in your policy.
Make Sure You Have the Right Amount of Property Insurance
An umbrella insurance policy will typically cover many events, such as someone’s claim that your company is responsible for damage to the individual’s personal property. However, many people falsely believe umbrella policies cover anything left over after their other policies pay out.
One area where an umbrella policy won’t kick in is with damage to your business property. Since umbrella insurance is meant to supplement liability policies, you’ll need to rely on your commercial property insurance to meet your needs for repairing damage to your company’s property. You’ll want to work with your insurance company to make sure you have enough coverage for this type of damage.
Plan for Handling Professional Errors
Professional liability insurance, or errors and omissions insurance, is designed to cover mistakes that could lead to malpractice lawsuits. This type of insurance can also cover situations where someone sues over undelivered services or missed deadlines that impact their personal or business finances.
Umbrella insurance doesn’t cover these types of lawsuits, but you do have the option of boosting the limits on your professional liability insurance policy by purchasing excess errors and omissions insurance. This type works a lot like umbrella insurance when it’s applied to this specific situation.
Anticipate the Need to Cover Employee Criminal Acts
Umbrella insurance is meant to cover costs that occur due to accidental events. Criminal acts are viewed as intentional, which means they won’t be covered by your umbrella policy. If an employee steals from a customer or causes some other form of harm, you’ll need to use commercial crime insurance, which takes the form of a fidelity bond. As with other types of insurance, you’ll want to analyze the potential risk and cost of a crime related to your business so you can purchase the right level of coverage.
Business owners need to make sure they protect their companies and employees by purchasing the right insurance coverage. For affordable, reliable business insurance as well as homeowners, renters, motorcycle, and auto insurance, San Diego residents should call on the trustworthy professionals at Altra Insurance Services. Reach out to us today at (619) 404-6311 to learn how we can satisfy all your insurance needs.