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Recently blogged that Umbrella policies will not cover most professional liability exposures; including Attorney and Accountant Malpractice perils.  To get additional coverage limits for your professional liability policy you need to get an “Excess” Professional Liability Insurance policy.  So why buy a commercial umbrella policy?

Commercial Umbrellas are one of the most undersold and misunderstood policies.  Most people only think of a umbrella policy providing additional liability coverage limits for your general liability (usually part of your Business Owners Policy), your commercial liability auto exposures (including hired and non-owned auto) and your workers compensation policy liability exposures.   If your primary limits are exhausted, then the umbrella provides the additional liability coverage that may be the difference between protecting your hard earned assets or having your assets being exposed to a large judgement.   For instance, say you have hired and non-owned auto coverage for with a limit of $1,000,000.  Your employee while going to the bank for the daily business deposit seriously injuries someone in an auto accident.  Your employee is liable and your business is sued and a judgement given for $1,500,000.  Without an umbrella the additional $500,000 will come out of the businesses assets or your personal assets.

What many people do not know, unlike an excess policy, is that an umbrella also potentially broadens liability coverage for certain other liability exposures that may not be covered otherwise.  For instance an umbrella policy may provide worldwide liability coverage, where your other liability policies may just be limited to the USA.  In this case the liability policy subject to the insured retention (deductible) becomes your primary coverage. 

Again unlike excess insurance, most umbrella policies are not “following form”.  This can be good and bad.  The good part is that the umbrella policy may provide liability coverage for coverage specifically excluded in your underlying coverage.  Bad part is that it may have exclusions for something covered in the primary insurance coverage. 

Commercial Umbrella policies for small business are Occurrence Policies.  The commercial umbrella policy will normally have a schedule of underlying policies with required limits needed to be inforce.   Umbrella policies generally start at around $400 so they are a bargain for the additional coverage that is provided.

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