What is Commercial Umbrella Insurance?

Running a business comes with certain liability risks, and these risks sometimes can be quite substantial. Should a liability claim exceed a primary insurance policy’s limits or not fall within its coverages, commercial umbrella insurance may provide Massachusetts businesses with additional protection.

Commercial umbrella insurance is supplemental commercial liability insurance. As supplemental insurance, a commercial umbrella policy normally provides coverage only once an underlying policy’s limits and coverages are exhausted. This type of insurance may also be referred to as “secondary insurance.”

What Massachusetts Businesses Should Have Commercial Umbrella Coverage?

Many businesses in Massachusetts can benefit from the supplemental protection that commercial umbrella coverage affords, for many businesses could potentially face a major liability lawsuit. 

Businesses in high-risk industries, where major property damage, injury or death is possible, have obvious risks to protect themselves from. Even businesses in more mundane industries could face a major liability claim if something bad happens, though. After all, just the legal costs associated with a commonplace slip-and-fall claim can be expensive.

Moreover, commercial umbrella coverage is readily available for a wide variety of businesses and other organizations. The following are just a few examples of situations where this coverage may be helpful:

• Professionals may use commercial umbrella coverage to pay a liability claim that they otherwise wouldn’t have funds to fight or settle
• Companies with major assets may use the coverage to shield themselves from opportunistic liability suits
• Businesses that serve many customers may use the coverage to shield themselves from class-action suits
• Nonprofit organizations may use the coverage to protect against a range of suits that they wouldn’t be able to fight with their own resources
• Government institutions may use the coverage to shield themselves from a range of suits 

What Are Underlying Limit Requirements in Commercial Umbrella Policies?

Commercial umbrella policies often come with underlying limit requirements, and coverage may be compromised if these requirements aren’t met. 

An underlying limit is generally a certain amount of coverage that must be maintained through a primary insurance policy (or underlying insurance policy). This usually helps ensure that claims up to a certain amount can be covered by the primary insurance policy and without filing a claim against the umbrella policy.

Because meeting underlying limits is important, businesses should work with an insurance agent when setting up a commercial umbrella policy. An agent who’s familiar with this type of coverage will know how to check for underlying limit requirements and how to make sure those requirements are sufficiently met through primary policies.

What Are Self-Insured Retentions in Commercial Umbrella Policies?

Commercial umbrella policies often also have self-insured retentions, and meeting these is generally just as important as meeting underlying limit requirements is.

Self-insured retentions normally dictate how much a business is required to pay for a claim before a commercial umbrella policy will cover claim-associated costs. The retention is akin to an underlying limit requirement in some ways, except the retention is met by the business rather than another insurance policy.

An insurance agent who’s familiar with commercial umbrella policies can also help businesses make sure they’re able to meet any self-insured retentions that a policy has.

How Can Massachusetts Businesses Get Commercial Umbrella Insurance Coverage?

For help finding a commercial umbrella insurance policy that’s well-suited to your business’ needs, contact the independent insurance agents of Flavin & Flavin Insurance. Our agents can help you compare quotes from different companies in Massachusetts, and we have the experience necessary to help you identify the best policy option.