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Does My Small Business Need Umbrella Insurance?

You cannot underestimate your small business’ need for insurance. The financial consequence of a single mishap can be dire and potentially wipe away your entire business assets. However, having an insurance plan will offer protection for your clients and others harmed at your company’s expense. Insurance may likewise cover for damages your small business may suffer because of unfortunate events like fire.

Accidents with huge losses barely occur, although when they do, the effects can be devastating. That is why you need umbrella insurance. In this post we’ll review what umbrella insurance is, why it’s important, and what exactly it means for your business. Perhaps by the end, you’ll consider it for your own small business.

What Is Umbrella Insurance?

Umbrella insurance is an indispensable personal insurance liability type of insurance when dealing with claims bigger than what your homeowner or auto insurance covers. For instance, if you are a boat owner, your umbrella insurance will take effect from where the boat’s insurance liability ends.

Umbrella insurance may likewise cover claims such as slander, libel, false imprisonment. A property owner may have coverage exceeding what’s covered by the renter’s policy.

Business Types That Need Umbrella Insurance

Most times, businesses that interact in person with clients and customers have higher liability risks. Your risks are also considerably higher when your staff uses dangerous or heavy machinery and tools to work. It would be helpful to consider buying umbrella insurance if your claim cost could extend beyond your liability limits.

For example, the risk of bodily harm or injury is much higher when you have people regularly visiting your business. Wholesalers may likewise use some equipment to restock their shelves during working hours. Such equipment may pose bodily harm to your customers. Your small business may face expensive medical bills and lawsuits that could exceed your liability limits when somebody gets hurt around your premises.

Your business risks are also increased when you work offsite. There is a significant risk of property damage when your staff works in a customer’s home. They can accidentally drill holes in walls, break windows and possibly damage cars on the property.

How Does Umbrella Insurance Work?

Consider this scenario to understand best how umbrella insurance works.

A customer slips and falls in your workplace, suffers significant bodily harm, has expensive medical bills, and then sues you. The court may side with the customer and award a $1 million judgment. However, you only have an insurance liability limited to $200,000.

Here, the judgment is $800,000 more than your insurance liability limits. You will have to pay an additional $800,000 out-of-pocket since your insurance only covers $200,000. Now you can imagine what such an amount can do for your small business.

If you have $1 million in umbrella insurance, it will cover the $800,000 and keep your business funds intact. The policy will likewise cater to other expenses, like attorney fees related to the lawsuit. That cover adds up to $1 million.

However, if you are liable and your insurance doesn’t apply, you will have to pay your umbrella insurance deductible before your umbrella insurance takes effect.

How Much Coverage Does Your Small Business Need?

It is easy to assume that only larger businesses require umbrella insurance, yet that is not the case. Your small business may lack in size, but not in risks. Umbrella insurance is designed for all companies with risk. The primary function of umbrella insurance is to extend your liability coverage, including staff liability, hired or non-hired auto liability, and general business liability.

Here is why your small business needs umbrella insurance, if you are not yet convinced:

  • Umbrella insurance tends to be savvier than attempting to raise your present liability policy limits.
  • You can quickly increase your insurance policy inclusions under an umbrella policy.
  • Umbrella insurance offers additional coverage for particular insurance claims that your other insurance policies may not cover.
  • Umbrella insurance is beneficial for covering high lawsuit settlements when your small business deals with high-net-worth individuals.
  • Umbrella insurance offers extensive coverage to give you the peace of mind you crave.

Besides helping your settlement costs, umbrella insurance may cover your legal expenses. Legal fees can quickly build up, so having an insurance policy covering these costs can remove elements that could threaten your business.

Running a small business demands paying many expenses, which makes something like umbrella insurance premiums seem too expensive and unnecessary at first. However, its benefits far outweigh the cost of premiums.

Keep to the Basics

Now, before buying an umbrella insurance policy, it’s important to ensure you have the right amount of general liability insurance.

General insurance liability is essential for your small business insurance plan since it covers damage to third-party properties or medical expenses if someone is injured on your work premises. General insurance liability policies may also cover lawsuits for damage to another person’s professional reputation.

In summary, the wisest approach to protect yourself and your business from distressing financial loss is with the right insurance policies.

Contact Schumacher Insurance Agency if you need help finding the policy that best fits your budgetary, business, and personal needs.