Commercial Liability Umbrella policies are very similar to a personal umbrella policy that a homeowner might carry to give themselves additional liability coverage that applies to all of their properties and vehicles….home, auto, boat, cabin, etc. Commercial umbrella policies provide that same additional liability coverage for all of a business’s assets, but there are additional options to reflect that greater risk exposure that a business has. The typical Business Owner Policy carries $1million in liability, same for the typical Business Auto policy. The umbrella policy provides an additional $1 to $10 million in liability coverage over all of a business’s policies.
One of the first things to understand is that a claim doesn’t always have to be realistic or justified. You may be sued for something that didn’t happen or that you certainly weren’t at fault for. You will almost definitely be sued for more as a business than you would as a private citizen. While a homeowner might only have access of liability limits on an umbrella policy up to $5million, the commercial umbrella policy offers limits to $10 million and above. This is reflective of the increased exposure that a business has, even when that exposure is entirely based on perception rather than assets. The fact is that even if your small business is just making payroll and it’s just you and some part time employees trying to make a go of the small business dream, you will be treated and portrayed in the lawsuit as though you were a Fortune 500 Corporation. Regardless of the size of the business, it is easy for the plaintiff’s lawyer to spin that they were victimized by a faceless and soulless company that has deep pockets and a questionable moral compass. This exact situation can take what would have been a couple hundred thousand dollar lawsuit for a private citizen, and turn it into a couple million dollar suit for a business.
Almost as frequently, though, claims are caused from the inside. Most of the time it’s an accident or an unintentional issue, but sometimes it’s a malicious action. Regardless of the cause, you have employees and everything that they do and say on company time including driving to pick up lunch for the team, delivering products or marketing materials, or even how they talk to your vendors, can expose your company to significant liability claims.
There are also a wide variety of opportunities to find that your company is liable for the products that you sell or the completed operations of work you did. Most small or medium size businesses sell products that are made by a supplier or a larger company. If the manufacturer is located in another country, you as the retailer can quickly find yourself as the responsible party when that foreign manufacturer is not subject to lawful service. You can also end up liable for something that is most likely a coincidence. An auto shop that does a service or a repair to a vehicle like repairing or rotating a tire can be found liable if that vehicle were to have a blowout later that day resulting in injuries. While the timing might have been a coincidence, being the last people to touch that tire so close to when it failed will almost certainly result in a lawsuit.
Liability protection in the form of a commercial umbrella policy is for designed to protect your business, your dream, your assets, and your future earnings. Costs are minimal with most commercial umbrella policies starting at $450 a year. Let your insurance company focus on defending and paying for a liability claim against your business, so that you can focus on what you and your business do best.
This post was written by Aaron Nicklay, Agent with Farmer’s Insurance. For more information on commercial umbrella policies and how Aaron can help protect your business, email him at anicklay@farmersagent.com or call (952) 229-5155.
