Liability lawsuit judgments against businesses can be very large. For instance, in 2019, a hotel in Tucson was sued after a guest drowned in its pool. The jury awarded the victim’s family $2.75 million.
If your company is sued but your liability coverage limits are too low to cover the damages, it will be responsible for the overages. This could potentially drive your business into bankruptcy. Fortunately, you can significantly boost your company’s liability coverage by purchasing a business umbrella insurance policy.
Independent insurance agents can help you find the coverage you need at a competitive price. With more than 400 independent agents with offices in Arizona, it should be easy to find an insurance agent near you.
What Is Umbrella Insurance for Arizona Businesses?
Business umbrella insurance is sometimes referred to as “commercial umbrella insurance” or “excess liability insurance.” It is designed to significantly boost the liability coverage provided by many of the insurance products your company currently holds.
How business umbrella insurance works
Business umbrella insurance works in conjunction with your primary liability coverage, which provides the first line of defense for liability claims.
If a covered incident exceeds what your primary business insurance liability policies can pay for, your umbrella insurance can step in to cover the remainder of the claim, up to its own coverage limits.
How Much Does Business Umbrella Insurance Cost in Arizona?
Umbrella insurance does not go into effect until your primary coverage is exhausted, and this makes it much more affordable. Because these policies are not overly expensive, it is possible for businesses to boost their liability coverage by millions of dollars without incurring large financial costs.
The price for coverage can vary from one business to the next according to factors such as:
- The potential liability risks your business faces
- The likelihood that your company will be faced with a large liability lawsuit
- The amount of extra liability coverage you are purchasing
On average, businesses in Arizona pay about $100 a month for every $1 million in commercial umbrella insurance coverage they carry. That’s a small price to pay to protect your business from losses related to large judgments in liability lawsuits.
What Does Commercial Umbrella Insurance Cover?
Business umbrella insurance is designed to provide excess liability coverage for certain commercial liability policies that your business is likely to carry. The two most common liability policies that business umbrella insurance provide coverage for are:
- Commercial general liability (CGL) insurance
Example: A tourist shopping at your Grand Canyon area gift shop suffers a serious back injury after slipping on a wet floor in your storefront. 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 transporting products to a distribution center, one of your drivers misjudges a lane change on Interstate 10 and causes a multi-vehicle collision 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 picks up the slack.
These are not necessarily the only liability policies that your umbrella insurance can supplement. Talk to a local independent agent to learn about whether your umbrella insurance policy can provide excess coverage for your other liability products.
In addition to covering your extra liability costs, your umbrella insurance policy can cover:
- Court costs and legal fees: Court cases that continue for a long time can build up high legal fees. Some business umbrella insurance providers include legal fees in your coverage total, while others offer it as an additional benefit that does not count against your coverage cap. A local independent insurance agent can explain how each policy you are considering handles the coverage of legal fees.
- Drop-down coverage: Some umbrella insurance policies allow you to purchase additional coverage through a drop-down clause. This clause can provide coverage for certain events that are not covered under your business’s primary liability coverage. In this case, your umbrella insurance can drop down to provide full coverage for these gaps once your deductible has been met.
Learn more by talking to an independent insurance agent near you.
What Doesn't Commercial Umbrella Insurance Cover?
It is important to be aware that most business umbrella insurance policies have limitations on what they will cover. You should not expect your umbrella insurance to provide excess coverage for:
- Criminal acts: If the liability expenses faced by your company are due to criminal acts committed by you or your employees, you should not expect your umbrella insurance to provide coverage.
- Professional liability insurance: Umbrella insurance does not cover excess liability expenses for professional liability coverage, including malpractice insurance and errors & omissions insurance.
- Employment practices liability insurance (EPLI): Your EPLI policy should have high enough coverage limits to cover your legal defense if your company is accused of illegal employment practices. Costs are only likely to exceed your coverage limits if your company is found guilty. Because criminal acts by employees are not covered by umbrella insurance coverage, umbrella insurance does not boost this coverage.
- Cyber liability insurance: Your cyber liability insurance policy can provide a significant amount of coverage against cyberattacks and data breaches. However, if your liability damages go beyond what your policy can cover, your umbrella insurance is not likely to help.
- Product recalls: Although product liability insurance is supplemented 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 needing 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 Arizona
Independent insurance agents in Arizona make it easy to find the best umbrella insurance for your business. 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 400 independent agents in Arizona who are ready to help. To get more information and to start comparing business umbrella insurance quotes, you can set up a one-on-one consultation with an insurance agent near you.
TrustedChoice.com Article | Reviewed by Jeffrey Green
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