Commercial Umbrella Insurance provides extra liability protection in the event of claims that go beyond your other liability coverage limits. It complements existing liability coverage by activating when your liability coverage limits are reached. Same types of expenses are covered by Commercial Umbrella Insurance as by Commercial Liability insurance, such as medical payments, legal defense fees, and damage from lawsuits.
Knowing what your Commercial Umbrella covers is important for being able to apply it in the event of claims. There are a few important things to keep in mind. First, Commercial Umbrella Insurance is not a standalone insurance policy and can only be purchased if you have an underlying policy in place. For example, you cannot purchase Commercial Umbrella to cover your Commercial Liability needs if you do not have Commercial Liability Insurance.
Second, to be able to activate Commercial Umbrella policy in the event of a claim, the limit of your underlying insurance policy has to be met. For example, if the customer of your business got physically injured while at premises, and sued you for $1,5 million, your Commercial Liability coverage limit may only be $1 million. If you have a Commercial Umbrella policy, it will likely cover the remaining $500,000, depending on your umbrella coverage limits.