Although an umbrella insurance policy is good for an individual or a family, it is essential for a business.
So let’s start with the basics. What is umbrella insurance? An umbrella insurance policy covers a business, up to the value of the policy coverage beyond the maximum limits for each of the risks covered; in addition, it covers certain other risks for which there is no cover specified by means of an addendum in one of the insurance policies or a separate insurance policy.
Risks covered beyond most companies’ insurance policies or endorsements. Again, these are risks for which you probably already have insurance.
Injury – for example, a visitor slips and falls in your hall.
Personal property damage – p. Ex., Collision of one vehicle with another – when one of the vehicles is yours.
Real estate guarantees – damage to the building, rental housing, etc.
Malpractice or professional negligence – companies are not always covered except in cases where there is a history of litigation – for example, medical malpractice.
Additional risks covered (companies generally do not insure themselves against these risks): disputes resulting from slander, mental or anxiety disorders, emotional injuries, defamation.
Remember that in any claim, the Umbrella insurer will first want you to be paid under your primary insurance policy; they will intervene when you have reached the maximum of your main insurance. So, ultimately, Umbrella insurance is protective insurance against catastrophic risks that could close your business or cost you huge sums in the event of a dispute.
Indeed, umbrella insurance is and should be part of your line of business protection products, just like you have credit card or fraud insurance. Unfortunately, ours is a contentious company. There are hundreds of lawyers whose main competence is to advise victims, real or imagined, to initiate proceedings, or at least to threaten them, in order to obtain the best “offer” possible.
I do not mean to suggest that litigation relating to injuries, emotional disturbances, etc. are always, if not especially, blatant.
So how do you determine what you need? Some tips:
- talk to your insurance agent. He is a versatile professional who not only assesses the needs of the business but also the sharing of experiences.
- depending on the size of your business and the industry you find yourself in, you want to be with the bigger business rather than smaller. Large insurance companies have more resources in case they need to negotiate a settlement, they also have access to excellent lawyers. The extra money you pay for their “brand” is often worth it.
- Talk to your friendly competitor, or even key suppliers. They can share their experience with you and offer you a solid good market.
- Make sure your primary insurance is good. It should not only cover you for common risks, but also cover should be sufficient. Don’t make sure you save a few dollars.