Is Commercial Umbrella Coverage Necessary?



Private and commercial umbrella coverage is all over the television. This is cleverly done in cute commercials that show a dog protecting his bone with a little red umbrella and train cars being protected by an umbrella while they are being shipped on a ship. These commercials are memorable, but they do not explain what umbrella coverage is and describe if it is really necessary for the average individual or business. These commercials may sell the insurance to those who do not need it while keeping those who do need it away due to the playful nature of the commercials, especially for private insurance.



Commercial umbrella coverage has another name that better describes the insurance policy, the commercial excess liability insurance policy. Commercial excess liability insurance is exactly what it sounds like. It covers the excesses that the traditional liability insurance does not cover. An example would be in a business had liability insurance of $1,000,000 but were faced with a settlement of $1,500,000 the traditional liability insurance would not be enough to cover it. The excess, the $500,000, would be covered by the umbrella insurance. This insurance would cover the excess of financial loss.

While it is often assumed that the company's normal liability insurance will be enough to cover the potential losses of the company, this is not always the case, especially with the increase of law suits. There are many cases where the company did not see a future risk, but one occurred. This would be in the case of an out of control office party that resulted in fights or personal injury. Another incident might be an accident within the building that resulted in the death or sever injury one or more employees. A failure in the ability to provide promised services or services that are up to the expectations of the client may also result in a law suit rather than the demand of refunds.

Commercial umbrella insurance is marketed to people and businesses alike. There is no differentiation of the customers in the marketing climate. There is the possibility of individuals purchasing the insurance policy with the understanding that they are protecting their property but not truly understanding what they are protecting it from. Unless the individual is at a high risk of being sued, the purchase of umbrella insurance is unnecessary and in all situations, the commercial insurance is not required by the individual person or even the family. The family is not a business, even if it is ran as such, and therefore is not considered commercial.