Sometimes a general liability policy, workers compensation policy and/or automobile liability policy limit just isn’t enough. In the event of an accident or catastrophe, claims can exceed the coverage limits of these policies. This is where umbrella or excess liability coverage comes in. Umbrella or excess liability is designed to protect against catastrophic losses that exceed the limits of the underlying policies.
Without umbrella or excess liability insurance the additional pay out could bankrupt your business…
How Does Umbrella Excess Liability Work?
The first layer of insurance defense is always the liability policy. This includes commercial general liabilility, workers compensation (the employers liability portion), automobile liability and watercraft or aircraft coverage. Once the limit of the policy on a given claim is exhausted, the umbrella policy will pick up any remaining claim payout up to the limit of the umbrella policy.
How Much Umbrella Coverage Should You Buy?
The easy answer to this question is: as much coverage as you can reasonably afford. The more complex answer is: it depends on your business. Some contractors and governmental entities may require higher limits of coverage that are available on a standard liability policy. You may also be interested in additional coverage just for peace of mind. You never know when a catastrophe may occur.
Here’s an example of situation why you should consider umbrella liability:
You have a $1,000,000 auto liability policy. Your driver causes an accident on the freeway that becomes a multi-car pileup, including a city bus. The number of vehicles damaged and the number of people injured in this accident exceed the $1,000,000 policy limit. Without umbrella or excess liability insurance the additional pay out over $1,000,000 would come out of your own pocket, and could bankrupt your business.
Your Hayes Broker can help you determine what limits might be right for you based on your risks and your budget. Call or email today to learn more.