Should You Cut Umbrella Coverage From Your Business Insurance?

When you own a business, it is your responsibility as the business owner to build a comprehensive insurance portfolio.  Without the right type of insurance, a small liability claim that goes to court can cost your company thousands and close your doors for good.  But when you are building an insurance portfolio, it is very important to stay within budget.  If your insurance expenses are getting to be too much, one of the first things that you may consider doing is cutting back on your insurance coverage.  Between your commercial auto insurance, your building coverage, life insurance, and your business property coverage, you may have a lot of options to choose from.  One of the first things many business owners drop to cut costs is commercial general liability coverage.  If you are debating whether or not your umbrella policy is worth the premiums you pay, read on.

Why Do Businesses Carry Commercial Umbrella Policies?

You might be wondering why you need a general liability policy when you carry liability insurance elsewhere.  After all, when you buy a Business Owners Policy, the policy provides building coverage, business property coverage, and liability coverage.  You also have a commercial auto insurance policy to cover your business vehicles, and this policy includes physical damage coverage, and also liability coverage for when your employees are on the road.  While you do have protection built into each of your individual commercial insurance plans, the liability protection that is included within these policies may not be enough.

In today’s very litigious times, there are people who are looking for the opportunity to sue just about anyone to earn a buck.  Small businesses are generally a target for these litigious individuals because they know that the business has insurance, they own more than an individual would, and they are not big enough to hire expensive lawyers like multi-national corporations do.  Your general liability umbrella policy is designed to reduce the risk of a lawsuit due to negligent acts that may cause injury, property damage, or harm to the reputation of the claimant.

Additional Protection

The standard commercial auto and property insurance policy does not provide enough liability coverage to protect your business against larger and more serious claims.  Instead of raising the liability limits on each of your policies, you can purchase general liability insurance that will provide blanket protection over all of your exposures.  The typical umbrella policy starts at $1 million.  If you were to raise all of the liability limits on your other policies, you are bound to pay more than you would to purchase this specialty policy.

A Broader Form of Coverage

In some cases, your umbrella policy will provide coverage for situations that may not be covered under your other insurance plans.  Many situations are excluded from business liability coverage, unless there is a commercial umbrella to fill in the gap.  If you have a quality plan, you can fill in the gaps and get the peace of mind you need to know you are covered.

If you think you are going to save by cancelling your commercial umbrella policy, you should think again.  Not only are these policies relatively inexpensive for smaller businesses, they can also be very valuable when your primary liability limits are exhausted.  While there is a potential that you will never use your umbrella, you never know when an unexpected accident can happen.  Protect your business from uncertainties, and never worry about losing what you have worked so hard to build because of one claim.

Jeremy Chase wrote this article on behalf of the Weintraub and Smith firm. When you or your business are facing bankruptcy due to excessive coasts or lack of insurance, meet with a certified bankruptcy attorney to discuss your options.

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