Liability lawsuit judgments against businesses can be exceedingly large. If your company is sued for a covered event but your liability coverage limits are too low to provide full coverage, the additional costs will be charged to your business. This can be enough to drive many small businesses into bankruptcy.
Fortunately, you can significantly boost your company’s liability coverage by purchasing a business umbrella insurance policy. A local independent insurance agent in Alabama can help you find the coverage you need at a competitive price.
What Is Umbrella Insurance for Alabama Businesses?
Business umbrella insurance, which is sometimes referred to as commercial umbrella insurance or excess liability insurance, is a liability insurance policy that is designed to significantly boost the coverage provided by some of your company’s commercial liability coverage.
How business umbrella insurance works
Business umbrella insurance works in conjunction with your primary liability coverage, which is the more expensive policy.
If a covered incident exceeds what your company's primary liability coverage can pay for, your umbrella insurance can cover the remainder of the claim, up to its own coverage limits.
How Much Does Business Umbrella Insurance Cost in Alabama?
Because umbrella insurance does not kick in until your primary coverage is exhausted, it is much more affordable. This enables businesses to boost their liability coverage by millions of dollars without breaking the bank.
While the cost for coverage can vary from one business to the next according to factors such as the following.
- The type of business you own and the industry in which you operate
- The liability risks and exposures your company faces
- The likelihood that your company will be responsible for a high-cost liability incident
- The amount of coverage you are purchasing
In general, however, businesses in Alabama pay about $100 a month for $1 million in commercial umbrella insurance coverage. That’s a small price to pay to protect your business from unsurmountable financial losses in the event of a major liability incident.
What Does Commercial Umbrella Insurance Cover?
Business umbrella insurance can provide excess liability coverage certain commercial liability policies your business is likely to carry including the following.
- Commercial general liability (CGL) insurance
Example: A tourist staying at your Gulf Coast hotel suffers a serious head injury after falling from a hotel balcony. Their medical costs and lost wages greatly exceed what your premises liability insurance can cover so your umbrella insurance policy picks up the slack.
- Commercial vehicle liability insurance
Example: While delivering a truckload of products to your company warehouse, one of your drivers misjudges a lane change on Highway 481 and causes a multi-car pileup in which several people are injured. The resultant costs are much higher than what your commercial auto insurance policy can cover so your umbrella policy kicks in.
These are not necessarily the only liability policies that your umbrella insurance can cover. Talk to a local independent agent to learn about excess coverage for your other liability products.
Additionally, your umbrella insurance policy can cover the following.
- Court costs and legal fees: Court cases that continue for a long time can build up high legal fees. Some business umbrella insurance policies may include legal fees in your coverage total, while others provide it as an additional benefit. Your insurance agent can explain how each policy presented handles the coverage of legal fees.
- Drop-down coverage: If your umbrella insurance policy includes a drop-down clause, it can provide coverage for certain events that are not covered under your business’s primary liability coverage. In this case, umbrella coverage can drop down to provide full coverage for these gaps once a deductible has been met.
Learn more by talking to an independent insurance agent near you.
What Does Commercial Umbrella Insurance Not Cover?
Umbrella insurance doesn’t cover everything. For instance, it will not boost your commercial property insurance coverage. It is only designed to cover excess liability expenses.
However, not every type of business liability policy is included in the coverage offered by most commercial umbrella insurance policies. For instance, the following are often excluded from umbrella coverage.
- Criminal acts: If the excess liability expenses faced by your company are the result of criminal acts by you or your employees, you should not expect your umbrella insurance to provide coverage.
- Errors & Omissions insurance: Umbrella insurance does not cover excess liability expenses related to professional errors including malpractice.
- Employment practices liability insurance (EPLI): Your company is not likely to exceed the coverage limits of its EPLI policy unless it is found guilty of committing illegal acts related to employment practices. Because illegal acts by employees are not included in umbrella insurance coverage, EPLI is not included in umbrella coverage.
- Cyber liability insurance: Your cyber liability insurance policy can provide a significant amount of coverage against cyber attacks and data breaches. Unfortunately, if your liability damages go beyond what your policy can cover, your umbrella insurance is not likely to help.
- Product recalls: While product liability insurance, which is included in your commercial general liability insurance, is covered by umbrella insurance, losses sustained by your company as a result of product recalls are not.
- Aircraft and watercraft liability insurance: If your business operates aircraft or watercraft, you should be able to buy a policy that provides a significant amount of liability coverage without an umbrella policy. Most insurers will not provide this coverage in an umbrella policy.
A local independent insurance agent can help you review what your umbrella insurance policy will and will not cover before you make a purchase.
How to Easily Compare Commercial Umbrella Insurance Quotes in Alabama
As with any type of insurance, the only way you can be sure that you are not overpaying for your coverage is by requesting and comparing a few customized quotes.
Independent insurance agents in Alabama making comparison shopping easy by doing the legwork for you. These agents can help you determine how much coverage your business needs and can request and obtain quotes from some of the area’s leading insurance providers on your behalf.
There are more than 330 independent agents in Alabama. Find an insurance agent with an office near you to get more information and to start comparing business umbrella insurance quotes.
TrustedChoice.com Article | Reviewed by Jeffrey Green
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