Whether new, current or seasoned, a business insurance policy protects a business against property damage, theft, worker injury, and general liability. An umbrella insurance policy, or a commercial umbrella insurance policy, takes over when coverage limits under a traditional commercial policy are exhausted.
Umbrella Insurance Explained
A commercial umbrella insurance policy protects a business against being unable to pay for the cost of damages, claims or lawsuits that exceed regular insurance policy limits. These types of policies provide a business and its owners with coverage above and beyond the limits of their regular auto, general liability, and other liability coverage.
An umbrella policy's coverage is universal. This means that its coverage comes into effect after any other type of coverage is exhausted and does not necessary need to be the same type of policy coverage, such as an auto policy and an auto umbrella policy.
Beginning the Search for a Policy
Many different companies offer commercial umbrella insurance policies, but it's not a good idea to run out and purchase the first policy you find. Instead, consider finding the policy that's perfect for you as a four-step process:
- Determining your coverage goals
- Finding available policies
- Investigating offered policies
- Choosing your policy
These four steps will provide you with the knowledge you'll need to make the best decision possible.
Determining Coverage Goals
The first step to purchasing any insurance policy, including a commercial umbrella insurance policy, is to determine how much coverage you need. Since coverage under an umbrella policy begins after you reach the maximum limits, you should first look to your policy limits for your other policies.
Review each policy's coverage to see whether you think it is high enough for your business' operations. For example, if your business engages in trucking on a daily basis, check to see if your auto policy limits are high enough to give you peace of mind.
Make a note of any policy limit that seems low or that causes you to worry about possibly not providing enough coverage. The policy with the lowest limit that you mark down tells you the dollar amount to begin your search for coverage.
Numerous insurance agencies offer commercial umbrella insurance, or you can call an insurance agent or broker to assist you in finding a policy that is good for you.
There are several highly regarded or ranked insurance companies that offer commercial umbrella insurance policies. In January 2013, Insure.com published a list of the best insurance companies, as ranked based on customer satisfaction surveys. Standard and Poor also rates insurance companies, with ratings range from AAA, meaning that the company has been found to have an extremely strong capacity to meet financial obligations, to D, which indicates that the company defaults on financial commitments. From these two sources, notable companies include:
- USAA: Identified as having high customer service on Insure.com's list, this company, which specializes in policies for members of the military, veterans, and their qualifying family members, helps its clients work with third-party insurers to obtain commercial umbrella coverage. For this type of policy, the company mainly provides assistance to small businesses.
- Nationwide Insurance: This insurer offers commercial umbrella insurance policies that can be customized to meet each business' needs. It was rated an A+ by Standard and Poor.
- Travelers: This company offers what it calls "commercial umbrella and excess liability" policies, which are designed to protect companies against substantial losses stemming from unexpected circumstances. It was rated an AA by Standard and Poor.
- American Family Insurance: This company's commercial umbrella policies give business owners extra protection against large monetary losses due to accidents and lawsuits. This company was ranked an AA- by Standard and Poor.
- LI Corp: This insurer's commercial umbrella policies are specifically crafted to meet each businesses' needs. Offered coverage includes general liability, business auto liability, and employer liability. It was ranked a BBB+ by Standard and Poor.
- Geico: This company offers a commercial umbrella insurance policy. Quotes can be obtained online through the company's website. It was ranked an AA+.
- Chubb Group of Insurance Companies: This company boasts having commercial umbrella insurance plans that are flexible to meet its clients' needs. It offers two general plans, which can be customized. The company was ranked with an A+ by Standard and Poor.
- Allied Insurance: This company offers commercial policies, quotes for which can be obtained online. It was ranked with an A by Standard and Poor.
Agents and Brokers
Alternatively, you can seek help from an insurance agent or broker. An insurance agent only works for one insurer, selling that insurer's products, while a broker sells policies from several different companies. You may be able to find an insurance agent or broker by recommendation, but you can also search for an agent on the Independent Insurance Agents and Brokers of America website.
Before working with any agent or broker, investigate his or her background. Most state's insurance agencies provide information regarding licensure and any disciplinary actions for brokers and agents working within their borders.
Investigating Offered Policies
Whether you've found commercial umbrella policies on your own or with the assistance of a third party, it's now time to investigate their specifics. When investigating policies, consider:
- Policy cost: Can your business afford the premiums and any deductibles the policy charges?
- Policy coverage: Does the policy provide as much financial coverage as you seek?
- Policy enactment: What do you need to do to obtain coverage under the policy? What paperwork or other documentation must you show after you've exhausted other policy coverage?
- Policy exclusions: Does the policy exclude or otherwise not provide coverage for certain types of events?
- Policy changes and cancelations: Are you comfortable with the company's rules regarding changes to the policy, such as newly created exclusions? What is the company's rules regarding cancelling the policy, either by you or the company?
Choosing Your Policy
After conducting research and finding the best policy for you, it's time to make your purchase. However, remember to review your policies annually to ensure that they provide adequate coverage.