Business Umbrella Insurance
Who Needs Business Umbrella Insurance?
Any Company Can Be Sued for Negligence or Wrongdoing
Business umbrella insurance is critical in today’s litigious environment. People are more prone to sue a company or business professional now than ever before, particularly when they feel wronged by an organization that has (or is perceived to have) deep pockets. Business umbrella insurance provides extra liability protection to help protect your business in the event of a major law suit.
Contact an independent agent in the Trusted Choice® network today to get your questions answered about commercial umbrella insurance. These agents work with many different insurance companies and can provide several quotes for you to compare. Your independent commercial insurance agent can handle all of your business insurance needs out of one office.
Top Three Reasons to Own Business Umbrella Insurance
- Your professional liability insurance can be quickly exhausted by legal defense fees
- You have significant business assets to protect
- Your company is at risk of legal claims due to the nature of the products or services you provide
- You work in a field that is prone to litigation
Corporate Lawsuits: How Commercial Umbrella Insurance Protects You
Business lawsuits happen every day. What is your risk? When you want to assess the likelihood of a liability claim being filed against you, and evaluate the resources you need to have in place to protect your bottom line, a chat with an independent agent who specializes in commercial insurance is a great place to start.
Many small to midsized businesses think that only big businesses are at risk of legal action. However it is important to know that any business can be hit with a liability claim or lawsuit. Relatively minor actions, and even a moment of inattention by one of your employees on the road, can unfortunately lead to big legal action.
Here are some examples of liability risks:
- An employee says something damaging about another person or corporate entity on a social media platform while on the job
- Advice that a staff member provides, in a consulting capacity (such as financial or tax advice) leads to a patron’s financial loss
- A business patron slips on an icy walkway or is injured falling down slippery steps
- A bartender at the local watering hole serves one too many cocktails and a customer causes a deadly accident
- A server spills hot coffee on a patron, causing a severe burn
- Use of a company’s product leads to an illness or death
- A chiropractor’s adjustment results in an injury or stroke
- An employee makes a poor decision to rush through a yellow light, causing an accident that results in severe injuries and property damage
Unfortunately, it is not possible to know in advance the extent to which your business could be held responsible for negligence, “personal injury” (libel), or damages due to an accident or other incident. To protect your company, you can get a commercial umbrella liability policy that covers the potential excess liability insurance you may need in the event that you face a large lawsuit.
An Example of How Commercial Liability Insurance Works
As an illustration, let’s look at what would happen if you or one of your employees caused an accident that severely injured another person during the course of doing business.
In this scenario, assume your costs and legal fees came to $3 million dollars, which is unfortunately not unreasonable given the high costs of medical expenses, hospitalization costs, attorney fees and legal settlements. If you had $1 million worth of commercial liability insurance and $5 million worth of business umbrella insurance, your liability coverage would protect you as follows:
- Your business liability policy would pay the first $1 million of the liability claim.
- Your business umbrella liability policy, also known as “excess liability” would kick in after your commercial liability coverage to pay the remaining $2 million.
Without that excess liability policy in place, you would be responsible for the additional $2 million out of pocket. Unless you have that money stashed away for such an incident, a lawsuit would have major financial repercussions, without the extra protection of a business umbrella policy.
Does an LLC Protect Your Personal Assets in a Company Lawsuit?
Every year there are many business liability claims and business owners are personally sued due to negligence, fault and acts of libel. Legal professionals and creditors can go after a business professional’s personal assets in a scenario called “piercing the corporate veil.” If an attorney or creditor can prove that the business owner and the limited liability company (LLC) were inseparable, the business owner’s personal assets are at stake.
Business liability claims can happen even to well-meaning people. Here are some examples of situations where the structure of a limited liability corporation may not protect the business owner from legal responsibility:
- A business owner takes several clients out on his boat to enjoy the water and discuss a business deal, and one falls overboard and drowns.
- A physician prescribes the wrong medicine, causing a life threatening reaction.
- A supervisor asks a worker to disable a safety mechanism that protects factory workers from injury in order to increase production, and an employee is severely injured as a result.
Accidents do happen, even to conscientious professionals who have every intention of following safe business practices and protocols. A business umbrella insurance policy that provides the extra coverage you need to protect your business and finances can provide excellent defense against unforeseen incidents. And these policies are surprisingly affordable.
Contact a member agent in the Trusted Choice network today for a full review of your business risks. A local independent member agent can help to evaluate your needs, compare umbrella liability policies and quotes from multiple business insurance companies, and find the right fit for you.
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