An umbrella policy is created to provide additional coverage for when a liability claim is brought up for injuries, property damage and sometimes negligence. Additional coverage refers to higher/excess limits, or the filling of coverage gaps for underlying policies.
Umbrella policies are a great investment as it can provide additional limits to your business general liability, auto liability, employers liability (which is part of workers compensation), and sometimes Directors & Officers liability policies without taking a huge bite out of your wallet. Coverages and limitations apply by individual carriers; but your Quest Insurance professional will guide you through this process.
Why Does My Business Need Umbrella Insurance?
An umbrella policy has three advantages. First, it provides additional lawsuit settlement or damages  coverage for more than the underlying limits (usually $1,000,000 or more). Next, it provides added coverage for defense costs, which can easily amount to $100,000 or more. And finally, it provides liability coverage for certain lawsuits that may not be covered by your underlying business insurance policies.
For example, let’s say a person slips and falls at your business location and sues you. The defense costs and possible damages paid (either by settlement or punitive) may exceed the limits that are in your general liability policy, so once the general liability limits are exhausted, the excess limits will come from your umbrella policy.
Anyone concerned about losing business income or assets in one large lawsuit needs an umbrella policy. You cannot control who you might injure. For example, if you injure a CEO of a large corporation, a professional athlete or a doctor, you could owe for lost wages, medical bills, and pain and suffering. The lost wages alone for those types of people, if they cannot work for 10 years, could start anywhere from $2 million to $3 million, and can reach as much as 10 times that amount. Medical bills might be about $500,000. And then, there is compensation for pain and suffering. It is important to note that an umbrella policy will usually require what’s called a “self-insured retention,” which is the amount of money the insured must absorb before the insurer will pay the umbrella coverage claim.