As a business owner, you never expect the worst. But you can plan for it. Umbrella liability coverage can protect your business against catastrophic losses. An umbrella policy provides an additional coverage over your primary businessowners, business auto, or employers’ liability coverage limits.

Why should you consider an umbrella policy?

1. A typical businessowners policy (BOP) contains a per year (aggregate) liability limit. This is the maximum amount the policy will pay for all claims during the policy period. Consider the following scenario:

During an extremely busy day, an employee accidentally spills water on the floor. Before the spill can be cleaned up, a customer slips and falls due to the water and sustains a severe head injury. The customer files a lawsuit and is awarded $750,000 for medical payments and pain and suffering.

A few months later, an awning attached to your building collapses and injures dozens of people. Damages to those injured in the accident total $1,250,000. If the primary BOP has a $2,000,000 aggregate liability limit, no additional liability limit is available for other liability claims that may occur during the remainder of the policy period. An umbrella policy can provide an additional limit if your primary aggregate limit has been exhausted.

2. While most of us are worried about the inconvenience of a small fender bender, auto losses can result in some of the most significant liability claims. A moment of distraction looking at a cell phone, a slippery road, or simply being in a hurry can be devastating if you or an employee causes an auto accident. While a primary auto policy may provide a $1,000,000 liability limit, that may not be enough if the accident involves several people or vehicles. An umbrella policy limit is available to protect in the case of an unusually large claim.

3. An umbrella liability policy is affordable. Cost is approximately $500 for an additional $1,000,000 in coverage.