Primary commercial insurance policies give businesses a lot of protections, but there is often a limit to just how much protection any one primary policy will afford. Even if businesses select the highest limits available, they often can’t get a limit above a maximum amount. Commercial umbrella insurance policies offer Massachusetts businesses that want extra protection a way of procuring more coverage than what primary policies will provide.
Commercial umbrella insurance policies are typically secondary policies that supplement underlying primary ones. Since these are secondary policies, they’re frequently able to offer lots of protection at a relatively low price.
As liability lawsuits seem to become more common and more expensive, many Massachusetts businesses are adding additional protection to their insurance portfolio by getting a business umbrella insurance policy. Any business that wants extra safeguards against what could happen may be interested in this type of policy. Such businesses include (but aren’t limited to) companies that:
Professionals who own their own small businesses can often benefit from having a business umbrella insurance policy. They often fall into the last category listed above and have few resources to fight potential liability suits with. A business umbrella may offer protection against potential suits that professionals are ill-equipped to defend themselves against.
Many nonprofit organizations can also benefit from having a business umbrella policy. The work that nonprofits do frequently expose them to potential suits, and most nonprofits have very limited resources. They can scarcely afford to divert any toward a liability suit. Business umbrella coverage may help make sure they don’t have to.
As is the case with any insurance, the amount of protection that commercial umbrella policies provide varies. In general, policies offer lots of coverage -- often in the millions of dollars. They’re able to provide such protection and keep rates low because these are secondary policies and not primary ones.
Because every insurance policy has its own coverages, terms, conditions, exclusions and limits, it’s impossible to state that all commercial umbrella or all excess liability policies provide more coverage. Overall, however, commercial umbrella policies tend to offer broader protections than excess liability policies do.
Commercial umbrella policies normally have their own coverages, terms and conditions, which lets them provide protections that vary from those offered by underlying policies. This makes it possible for commercial umbrella policies to both fill in underlying policies’ coverage gaps and supplement multiple underlying policies.
Excess liability policies usually adopt the language of an underlying policy that they supplement. Thus, they typically supplement just one policy and don’t fill in coverage gaps.
The exception to the above general guidelines is when an excess liability policy is used to supplement a commercial umbrella policy. In these situations, the excess liability policy will often take on the coverages, terms and conditions of the umbrella policy. The protections provided by the excess liability policy will likely be similar to those of the commercial umbrella policy, just with even higher limits in place.
Most commercial umbrella policies come with strict underlying coverage limits that must be met by primary policies. These coverages must be double-checked when selecting a commercial umbrella policy, or else the umbrella policy’s protections might be jeopardized.
For help selecting a policy and checking underlying coverage requirements, Massachusetts businesses should contact an independent insurance agent who has specialized in commercial umbrella insurance. An independent agent will be able to get quotes from several insurers, and one that’s familiar with the particulars of commercial umbrella coverage will know how to make sure all applicable underlying coverage requirements are met.