As a business owner, you deal with a lot of expenses on a daily basis. But what if you face an expensive liability lawsuit? Would your primary insurance policy cover your losses?
To add an extra layer of protection to your business, you should consider getting excess liability insurance or commercial umbrella insurance, or both. These are two very similar insurance types. Many people consider them the same, but there are some clear differences between the two.
If you want to increase the limits of your primary policy, you can do it with one or both of these policies. Here’s what each of them entails and how they can benefit your business.
What Is Excess Liability Insurance?
Excess liability insurance is a type of insurance policy that increases the limits of your primary policy, without including any additional coverage. This means that it can help you cover the costs that go beyond the limit of your primary policy.
For instance, let’s say a customer suffers an injury in your business establishment and files a personal injury lawsuit against you. You end up being liable for the incident and face a settlement offer of $1.7 million. If your business liability insurance only covers $1 million, you would need to pay the remaining $700,000 out of pocket. But if you have excess liability coverage on top of your primary policy, it would cover the remaining cost.
An excess liability policy doesn’t extend the limits of multiple underlying policies, nor does it enhance any additional coverage.
Benefits of Excess Liability Coverage
Excess liability insurance can provide you with two very important benefits:
Extending the Limit of Your Primary Policy’s Coverage
If you face an expensive liability lawsuit that your general liability insurance can’t cover in full, your excess liability policy will kick in to cover any amount beyond the primary policy’s limit. This will save your business a lot of money.
Protecting Your Business Assets
Liability lawsuits can be very expensive. What if you face a substantial financial loss because of an expensive claim and have to sell some of your assets?
With an excess liability policy, you won’t have to. You won’t have to cover any expenses out of pocket or sell anything to keep your business afloat.
What Is Commercial Umbrella Insurance?
Commercial umbrella insurance is a type of excess liability insurance. That’s why it’s often referred to as umbrella excess liability insurance.
This coverage does pretty much the same as the former, except you can add it to multiple liability policies.
A commercial umbrella policy can increase the limits of:
- General business liability insurance
- Employer’s liability insurance
- Commercial auto insurance
Another difference is that umbrella excess liability insurance can cover additional liability claims that your primary policy may not include. So, if your business suffers losses or damages that your primary policies may not cover, your umbrella policy kicks in to cover the costs. In this case, this policy requires you to pay Self-Insured Retention (SIR) before it can cover any additional claim.
For instance, let’s say you get a commercial umbrella policy that has a $500,000 SIR, and your business needs to cover a claim of $250,000. Before your umbrella policy can kick in to cover the claim, you need to pay said SIR amount. Only then can your insurance provider cover the remaining cost, in this case, $250,000.
Benefits of a Commercial Umbrella Policy
Having a commercial umbrella policy on top of one or more underlying policies can help you experience the following benefits:
Protecting Your Business Against Multiple Expensive Liability Lawsuits
Since your umbrella policy can increase the limits of multiple primary insurance policies, you can have greater peace of mind in case of potential liability lawsuits. Your umbrella policy can kick in to cover multiple expensive claims and, just like excess liability coverage, save you quite a lot of money.
Broadening Coverage for Claims Not Included in Your Primary Policies
Every underlying policy has its limitations, but commercial umbrella insurance is there to save the day. It can protect your business against losses or damages that your primary policies don’t cover. It can enhance coverage for employee injuries, third-party bodily injuries, third-party property damage, and auto accidents.
Keep in mind that it can’t cover professional errors, business property damage, employee discrimination lawsuits, and damages within the limits of your primary policy.
Melton McFadden Excess Liability & Commercial Umbrella Insurance
Melton McFadden is the most trusted provider of excess liability insurance in Michigan. If you want to extend your underlying policy’s limits and reduce your costs in case of a liability lawsuit, we’re here to help you out.
Likewise, we can provide you with the best commercial umbrella insurance in Michigan. We can help you enhance coverage on multiple underlying policies and protect your business against potential liability lawsuits that can get quite expensive.
Feel free to reach out if you have any questions about our offerings. We can help you choose the right insurance plan that’s perfect for your business needs. Contact us today to get a quote or learn more about our insurance policies!
