FAQs about Commercial Umbrella Insurance

FAQs about Commercial Umbrella Insurance


Commercial umbrella insurance provides a layer of protection against liability. For instance, suppose that you’ve been sued for $3 million, but you only have $2.5 million to pay for your business liability coverage. That’s when umbrella coverage will come into play. It will cover the remaining $500,000 shortage. Here are some FAQs that will help you understand umbrella insurance better.

How Does a Commercial Umbrella Insurance Policy Work?

Suppose that you have a delivery business, and your worker gets into an accident while delivering goods. Of course, it was your worker’s fault, and the damage goes beyond the liability limit of the auto insurance policy.

In that case, you’ll have two options. You’ll either have to pay for them from your business’s funds putting your business finances at risk, or you’ll have to pay from your own pocket, putting your financial status in jeopardy. However, if you have a commercial umbrella policy, you wouldn’t have to risk your business’s finances or your own as it will pay for you.

Commercial car crash

What Can Commercial Umbrella Insurance Cover?

A commercial umbrella policy can help pay for the liability claims going beyond the limits of an insurance policy like commercial auto insurance or general liability.

A commercial umbrella policy will cover the costs of medical bills, legal expenses, court settlements and judgments, and property damage.

The insurance company LA often drafts commercial umbrella policies with limits between one million to fifteen million dollars.

What Does Commercial Umbrella Insurance Not Cover?

A commercial property insurance policy cannot be included in your commercial umbrella insurance policy. For example, if you have an office fire and your expensive equipment gets damaged, you will have to pay for the damages through commercial property insurance coverage—a commercial umbrella insurance LA policy will not work.

Coins, pens, and paper

Who Should Purchase Commercial Umbrella Insurance?

The liability risk of your company increases when your business works with its customers and clients. In addition, the risk gets greater if the employees use dangerous or heavy equipment on the job. Both these types of businesses will perform well if they increase their liability limits through commercial umbrella insurance.

Another such scenario includes a company where your workers perform their tasks on someone else’s land. If people frequent the premises of your work, it increases the chances of getting injured. In addition, working on another person’s property will also increase property damage risks. In both cases, increasing the liability limits through commercial umbrella insurance will be a smart move.

How Much Commercial Umbrella Insurance Costs?

The cost of commercial umbrella insurance is around $40 for a month for every $1 million of insurance coverage. The amount of coverage you choose and the risk your business can bear helps in determining the cost.

If you pay the whole premium amount right away, it will help you save money in the long run. That’s because, while paying monthly payments is convenient, you’ll end up paying more every year. In case you’ve got the money, you must pay the entire amount of the commercial umbrella policy.

Looking for Insurance Coverage in Los Angeles?

Farmers Insurance understands the insurance laws of California like no one else. If you’re looking for Umbrella Coverage LA, get in touch with them or request a quote to learn more.

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