A Look at Why Companies Need to Have Umbrella Insurance

A Look at Why Companies Need to Have Umbrella Insurance

Every company needs general liability insurance for the mishaps that can occur while they are doing business. General liability insurance policies have limits set on the amounts that the policy will pay if a covered peril occurs, and it may leave you with a very large bill to pay. An umbrella insurance policy increases these limits so that there is much less of a chance that you will be underinsured. You may need an umbrella insurance policy if you ever want to do the following:

Increase the Limits of Your General Liability Insurance Policy

You have general liability insurance, but this policy has limits attached. If you are the subject of a lawsuit and the plaintiff wins, the court may grant the plaintiff a sum of money that goes beyond the amount that your general liability insurance policy will pay. That means that your general liability insurance policy will pay the award up to the limits of the policy, but there may be millions of dollars left over.

This is why you need umbrella insurance. After your general liability insurance pays its obligations, the umbrella insurance policy pays the remainder of the award. If you do not have umbrella insurance, you would be entirely responsible for paying the remaining amount in full.

Reduce Potential Legal Fees

If you are the subject of a lawsuit, you would need to defend yourself in court, and this would be extremely expensive. An umbrella insurance policy would keep you from losing your business from having to pay extremely high legal fees.

Your Clients May Require It

A client of yours may require that you have umbrella insurance before they agree to do business with you. People ask this of other businesses because they want to make sure that their interests are protected in case anything goes wrong. Your general liability insurance policy’s limits may be lower than the client would like you to have. In this case, purchasing an umbrella insurance policy can satisfy the client and allow the business transaction to take place.

Extra Coverage for a Business with Vehicles and Drivers

If your employees are required to drive for the business, an umbrella insurance policy is a necessity. Any employee may cause an accident on the road, and the accident could involve more than one vehicle. More than one or two people may also be injured, so one accident could quickly use up the limits on your commercial auto insurance policy. An umbrella insurance policy would provide additional money to pay all of the injured parties’ medical bills and property repair bills or lawsuits.

Extra Coverage for Lawsuits

Anyone can fall in your place of business and then a lawsuit results. Lawsuits are highly hazardous to your bottom line because the lawsuit will not necessarily be frivolous. The customer or the vendor may severely injure himself and need to undergo years of physical therapy and rehabilitation that you will be required to pay. If you were to lose the lawsuit, you may also lose the assets you have accumulated for your business, and you may not be able to recover from these losses.