Check out some commercial umbrella insurance claim examples and learn why this business insurance coverage is vital for your company’s success.
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It’s exciting to own your own business. The thrills, the power, the heady rush of being in charge and making the rules. But on your path to world domination, it might only take one accident to derail everything.
That’s where commercial umbrella insurance can help. This liability policy can save you in the face of devastating losses and safeguard your company’s finances and reputation. But to better understand how this policy could work in your favor in the future, we’ll review what a commercial umbrella policy is and then look at some examples of when you’d need it most.
Broadly speaking, umbrella policies provide extra coverage on top of your other policies. And just as you can get an umbrella insurance for your personal life, so too can you get this kind of policy to cover your professional needs. Commercial umbrella insurance works to support your other commercial policies. This means that commercial umbrella insurance will kick in when:
Standard business liability insurance doesn’t cover everything, and its limits are, well, limiting. Many of these policies max out around $2 million, whereas commercial umbrella limits often exceed $15 million.
And while you may think you’ll never need that much coverage, keep in mind that business policy claims are often much, much higher than personal claims. You can quickly and easily run through several million dollars in a simple lawsuit.
So let’s look at some examples of when you might need to use your commercial umbrella insurance. Here are four common scenarios — though, of course, the possibilities are endless!
The words “liability” and “lawsuit” fill business owners with dread. That’s why it’s best to always prepare for the worst and hope for the best, which is exactly what a small, Arkansan natural gas company did:
When an employee’s error allegedly caused a natural gas explosion at a residence, resulting in the death of one individual and severe injuries for several others, the subsequent lawsuit (plus medical bills and attorney's fees) resulted in millions in damages and completely obliterated the company’s standard liability coverage.
The company did the only thing it could do: it submitted a claim to its commercial umbrella insurance provider, and the limits paid out the full extent of the suit. Without umbrella coverage, this company would have gone bankrupt. Instead, it was able to put its efforts towards improving safety protocols to ensure nothing like that happened again.
Car accident claims can be expensive. Any business that uses company cars should already have a commercial auto insurance policy in place (if your company doesn’t, now’s the time to get on it!). But if there’s a serious wreck, the policy might not cover the full extent of the damages.
Imagine it is the day before the Super Bowl, and a craft brewery's delivery truck is speeding down the highway trying to make all of its deliveries. The day is cold and the road is slick with ice. The driver takes a sharp turn to exit, skids, spins, and hits three vehicles.
The accident was not the result of negligence, but the driver was still found to be at fault. The exposure is high, the legal expenses enormous, and liability insurance policy limits have quickly run out. This is when the brewery’s umbrella liability policy steps in to cover the remaining damages.
You’re proud of the stellar products that your business produces. What keeps you up at night is the thought of a supply chain issue.
Problems with a product can lead to serious claims. (Have you seen that episode of “House” with the poison pants?) Imagine a small crafting company that sells thousands of crafting sheers a month. Unfortunately, no one noticed that the popular sheers are missing a safety guard. Multiple people report injuries and, given the United States’ medical system, rack up hundreds of thousands in medical expenses. To make matters worse, many individuals must stop working because of their injuries.
It’s easy to see how this claim could max out a company’s base liability limits. Umbrella insurance would provide the necessary additional coverage limits needed.
You might assume that most of your employees have their own personal insurance policies. But when these workers are on the clock and they’re negligent, their employer is always at least partially liable.
Take, for example, an advertising agency that works with multiple magazines. All is normal until one of the agency’s employees slanders the competition in an article in one of those magazines. The article results in severe reputational damage and financial loss for the competing company.
The employee doesn’t have professional liability coverage, and even if they did, the damages could run in the millions. Commercial umbrella insurance could help pay out the remaining expenses.
No matter the type of business, risk management procedures are integral to your company’s success. Excess umbrella insurance is one way to address risk.
And while the limits may be sky high, commercial umbrella insurance is actually relatively affordable. Most policies cost around $500 to $1,000 a year — a great deal given how much coverage they provide.
To find out what’s best for your company’s needs and budget, speak with an insurance agent. Remember that policies come in all shapes and sizes: what works for a national brewery might not make sense for a small town craft store.
You can’t predict the future, but with Marble, you can easily find all the coverage you need just in case. With Marble, you can shop for policies, compare quotes, and earn rewards — all with our easy-to-use digital wallet. Sign up today!
