When Do You Need Commercial Umbrella Insurance?

In the face of myriad operational and liability risks, business owners rely on the protection of insurance. Unfortunately, this insurance is not always sufficient to provide coverage against unexpected incidents, such as high-severity or expensive claims. To extend the protection for the state’s business owners, CA commercial umbrella insurance serves to provide coverage above and beyond existing policy limits. For business owners, CA commercial umbrella insurance is a valuable addition to the risk management toolbox. In this guide, we will explore umbrella insurance as well as giving agents tips on helping their clients determine if this insurance protection is right for them.

What is Umbrella Insurance?

Business owners often carry general and/or business liability insurance policies as a risk management foundation. Depending on the type of business, employer’s liability and commercial auto policies may also be in place. These policies provide protection for business assets – protection against claims made by customers, employees, and third parties. If your client’s business is involved in a lawsuit, these policies may not be enough against a judgement or settlement that exceeds policy limits. Umbrella insurance is the solution, extending limits in excess of established insurance policies. Think of umbrella insurance as insurance for your insurance. In the state of California, CA commercial umbrella insurance is a surprisingly affordable option for many business owners, particularly those in industries with high-frequency or high-value risk exposures. In general, an umbrella policy will cover the same risks as the underlying policy it is designed to enhance. Umbrella policies typically cover such exposures as:

• Vehicle accidents
• Lawsuits arising from employee injuries
• Slip and fall or premises injuries
• Lawsuits arising from property damage claims

It is important to understand that umbrella policies do not cover against all risks, particularly against professional liability claims or damage to business property. For those risks, excess liability insurance is the appropriate solution; although “excess” and “umbrella” are often used interchangeably, they are not the same in terms of business risk protection.

Who Needs Umbrella Insurance?

Formerly reserved for the largest corporations, CA commercial umbrella insurance has been sought after by smaller business owners who are exposed to legal claims against their assets. There are four key areas to consider when evaluating whether your client can benefit from the protection of an umbrella policy:

1. Does your client bid for state or federal contracts? Many contracts require high-limit business policies; umbrella policies help close the gaps in existing coverage limits.
2. Does your client interact frequently with the public? The more public traffic a business has, such as a retailer or commercial service provider, the higher the chance of an expensive lawsuit resulting from a liability claim.
3. Does your client’s business own or operate vehicles? Vehicle accidents can cause extensive bodily injury and property damage. If your client relies on vehicles for service delivery, an umbrella policy can provide higher coverage limits against vehicle claims.
4. Is your client in a high-risk or hazardous industry? These businesses tend to have a higher-than-average employee injury rate, which can quickly exhaust general liability or employer’s liability policies.

The risk of a lawsuit looms large over the business sector. A single lawsuit can result in millions of dollars in settlements or judgements, putting business assets at risk. A CA commercial umbrella insurance policy adds another layer of protection against losses, even as lawsuits escalate in volume and frequency.

Many business owners are surprised to learn that umbrella policies are affordable. In fact, the average cost of an umbrella policy is about $40 per month for each additional $1 million in coverage. A CA commercial umbrella insurance policy’s costs are influenced by factors such as the type of business your client conducts, the number of vehicles and employees the company has, and the coverage limits needed to protect against liability claims.

About Coastal Oak Insurance Services

At Coastal Oak Insurance Services, we strive to protect your personal and business assets from coast to coast. When you work with us, you’re family. Contact us today at (949) 519-3738 to learn more about how we can provide you with comprehensive and tailored insurance coverage.