Commercial Umbrella Insurance
Commercial umbrella insurance provides extra coverage when the limits of your general liability, commercial auto, or employer’s liability insurance are exceeded. It helps cover additional costs, protecting your business from large liability claims.
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Why Is Commercial Umbrella Insurance Important for Small Businesses?
Many business owners purchase commercial umbrella insurance to meet contract requirements that demand higher coverage limits than standard policies provide.
This insurance acts as an extra layer of financial protection for costly liability claims. If a lawsuit exceeds the limits of your general liability insurance, umbrella coverage helps cover the remaining costs, preventing financial strain on your business.
Commercial umbrella insurance extends coverage for:
- General liability insurance
- Employers’ liability insurance (included in workers’ compensation)
- Commercial auto insurance or hired and non-owned auto (HNOA) insurance
Coverage increases in $1 million increments, but insurers typically require you to carry a minimum amount of coverage on the underlying policy before adding umbrella insurance.
Businesses That Benefit from Umbrella Insurance:
- Need coverage beyond $2 million to meet contract requirements
- Have high liability risks, such as locations with heavy foot traffic
Require broader liability protection across multiple policies
Additional Coverages to Consider
Protect your business from unexpected risks with these essential coverages:
General Liability Insurance
fCovers customer injuries, property damage, and advertising claims. Helps with legal costs and is often required for leases and contracts.
Under this plan
Customer injuries
Business interruption incidents
Accidental damage to customer property
Business Owner’s Policy (BOP)
Bundles general liability and commercial property insurance for cost-effective protection against property damage and liability claims.
Under this plan
Customer injuries
Business interruption incidents
Accidental damage to customer property
Workers’ Compensation Insurance
Covers medical expenses and lost wages for work-related injuries or illnesses. Required in most states for businesses with employees.
Under this plan
Employee medical expenses
Disability benefits
Workplace injury lawsuits
Cyber Liability Insurance
Covers expenses from cyberattacks, data breaches, and legal fees, ensuring your business stays secure online.
Under this plan
Data breach investigations
Customer notification expenses
Fraud monitoring services
What Does Commercial Umbrella Insurance Cover?
Commercial umbrella insurance extends coverage for the same risks as your existing business insurance policies, providing additional financial protection.
Slip-and-Fall Injuries
When added to general liability insurance, it helps cover legal expenses if someone is injured on your business property.
Third-Party Property Damage
Extends general liability coverage to help pay for legal costs related to accidental damage to someone else’s property.
Car Accident Liability
When added to commercial auto insurance or hired and non-owned auto (HNOA) insurance, it covers costs if your business is sued for vehicle-related damages.
(Most states, including Texas and New York, require commercial auto insurance for businesses that own company vehicles.)
Employee Injury Lawsuits
Provides extra protection for employers’ liability insurance (included in workers’ compensation) by covering legal expenses from employee lawsuits over work-related injuries.
How much does commercial umbrella insurance cost?
For Eagle Nation customers, commercial umbrella insurance typically costs around $75 per month for every $1 million in additional coverage.
Several factors affect umbrella policy costs, including:
- Coverage limits
- Industry and risk
- Business Location
- Number of vehicles
- Number of employees
How Does Commercial Umbrella Insurance Work?
Think of commercial umbrella insurance as a safety net for your business. Your existing liability policies act as your first layer of protection, but if a claim exceeds their limits, umbrella insurance steps in to cover the extra costs.
When Do You Need It?
For example, if your general liability policy has a $2 million per occurrence limit, it can cover legal expenses up to that amount. But if a customer sues for $2.5 million due to a serious slip-and-fall injury, you would still be responsible for $500,000 beyond your policy’s limit.
How Does It Help?
A business umbrella policy would cover the extra $500,000, preventing your business from paying out of pocket.
When Can You Make a Claim?
You can file a commercial umbrella insurance claim when:
- Your business is sued for third-party bodily injury or property damage.
- The total lawsuit cost exceeds your underlying policy limit.
This additional protection ensures you’re covered against unexpected high-cost claims.
Who Needs a Commercial Umbrella Policy?
Commercial umbrella insurance was once mainly for large businesses, but with rising lawsuits and medical costs, more small businesses are now investing in it for extra protection.
You Should Consider Umbrella Insurance If:
You Need Higher Liability Coverage for Contracts
Many clients require businesses to have higher liability limits before signing contracts.
For example, if a general contractor needs a $5 million liability limit, but their general liability policy only covers $2 million, they can add a $3 million umbrella policy to meet contract requirements.
Your Business Has Heavy Foot Traffic
If your business frequently interacts with the public, your liability risks increase.
For instance, if a customer trips at your restaurant, suffers a severe injury, and sues for $3 million, but your general liability policy covers only $2 million, an umbrella policy would cover the extra $1 million.
Your Business Owns Vehicles
Businesses with company vehicles need protection beyond standard commercial auto insurance.
For example, if a window installer driving a company van accidentally causes a pile-up, other drivers may sue for damages. An umbrella policy would cover legal fees and settlement costs beyond the auto policy’s limits.
Your Work Involves High-Risk Tasks
Industries like construction and installation have higher employee injury risks.
For example, if an HVAC technician sues their employer for a chronic back injury from lifting heavy equipment, umbrella insurance can cover legal fees and settlements once the employer’s liability policy is maxed out.
If your business faces contract requirements, frequent public interactions, vehicle use, or hazardous work, a commercial umbrella policy provides affordable extra protection against costly lawsuits.
What Does Commercial Umbrella Insurance Not Cover?
While commercial umbrella insurance increases coverage limits for various liability policies, it doesn’t cover everything a small business might need. Here are some key exclusions:
Damages Within the Underlying Policy Limits
Umbrella insurance only activates after the primary policy reaches its limit. It won’t cover any claims below that threshold or exceed its own policy limit.
Business Property Damage
Umbrella insurance only extends liability coverage, not property insurance.
If your business property is damaged by fire, theft, or weather, you’ll need commercial property insurance under a Business Owner’s Policy (BOP) or Commercial Package Policy (CPP) for coverage.
Professional Errors & Negligence
Mistakes like missed deadlines or undelivered services are covered by Professional Liability Insurance (Errors & Omissions – E&O), not umbrella insurance.
To increase E&O coverage, you would need Excess Liability Insurance (Excess E&O), which works similarly to umbrella insurance.
Employee Theft & Fraud
If an employee commits theft or fraud against a customer or client, umbrella insurance does not provide coverage.
Instead, businesses need Commercial Crime Insurance (Fidelity Bond), which reimburses losses only up to the purchased coverage limit—umbrella insurance cannot extend it further.
Umbrella insurance is a valuable safety net, but it only extends liability coverage, not property damage, professional mistakes, or employee crimes. Businesses may need additional policies for complete protection.
Two ways to start your coverage
Quotes online
Enter your information through a simple application to get personalized insurance quotes from multiple A-rated companies. Eagle Nation uses an easy system that lets you compare options online and choose the top coverage for your business in minutes.
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Verified Commercial Umbrella Insurance Reviews
Hear from customers like you who purchased insurance.
FAQs about commercial umbrella insurance
Most businesses purchase umbrella insurance to meet contract requirements that exceed $2 million. Some contracts may require up to $5 million in coverage. In such cases, a business would add a $3 million umbrella policy to an existing $2 million liability policy to meet the requirement.
Beyond contract needs, the amount of coverage depends on your industry and business risks. For example, a construction company may need higher limits to protect workers from costly lawsuits.
You Must Have an Existing Policy
You can’t buy umbrella insurance on its own. It requires at least one of the following policies:
- General Liability Insurance
- Employer’s Liability Insurance
- Commercial Auto Liability Insurance
Umbrella Insurance Does Not Cover Property Damage
It only extends liability protection and won’t cover business property damage. If you need property protection, you'll need commercial property insurance instead.
Coverage comes in $1 Million Increments
Small business owners can customize their coverage by adding $1 million at a time, ensuring they only pay for what they actually need.
Not sure how much coverage is right for your business? Talk to a licensed insurance agent for guidance!
Many people use commercial umbrella insurance and excess liability insurance interchangeably, but they’re not the same.
Excess Liability Insurance
- Extends coverage for one specific liability policy (e.g., general liability or E&O insurance).
- Only applies to the same risks covered by that policy.
Commercial Umbrella Insurance
- Expands coverage across multiple liability policies.
- Helps cover claims that exceed the limits of your existing policies.
You can find more details in our Frequently Asked Questions about commercial umbrella insurance.
Have specific questions? Contact an Eagle Nation agent for personalized guidance!
"As a small business owner, I always worried about unexpected lawsuits. This policy gave me the extra protection I needed. Now, I can focus on growing my business without stressing over liability claims!"