In a culture where litigation is commonplace, business owners have many more worries than making profits and retaining top employees. If your product injures a consumer, your organization could face a devastating lawsuit, exponential damages and a tainted reputation in the marketplace. To assist with the financial burden of a claim, many business owners purchase commercial umbrella insurance on top of their standard Commercial General Liability (CGL) insurance policies.
Most CGL policies have an aggregate limit that, once exhausted, will not cover any other excess claims. Experienced business professionals understand that the litigious nature of our society combined with surmounting liability judgments are reason enough to purchase additional coverage.
Purpose of Umbrella Coverage
- Provides coverage for potential damages and court defense costs that exceed underlying insurance limits.
- Provides coverage in situations that are not covered that are not covered by underlying policies but are not excluded from the umbrella policy. This benefit is subject to a self-insured retention (SIR), similar to a deductible, in which the policy holder is responsible for losses up to the SIR amount.
A typical umbrella policy has the following features:
- Offers coverage for world wide; personal injury; blanket contractual liability protection; care, custody and control; watercraft liability; advertisers liability; liquor liability
- Offers an extension of insurance protection for additional insureds.
- Policies follow form, meaning they abide by similar provisions and cover similar losses as the underlying policy. The damage must also involve personal injury, property damage or advertising injury.
- Policies also protect an organization’s executive officers, regular employees, directors and stockholders acting on behalf of the organization.