When Does Commercial Umbrella Insurance Kick In? Real-World Examples

Commercial umbrella insurance may extend the liability coverage of your existing business policies. When a claim surpasses the limits of your underlying coverage, umbrella insurance can help cover the remaining costs, up to the umbrella policy’s limit. This can be crucial for Florida businesses facing large lawsuits or catastrophic events.

When Does Commercial Umbrella Insurance Kick In?

Umbrella insurance only activates after the limits of your primary liability policies have been exhausted. Here are some real-world examples to illustrate how this works:

• Example 1: Slip-and-fall lawsuit—A customer slips and falls in your store, resulting in serious injuries. Your general liability policy may cover up to $1 million, but the court awards $1.5 million in damages. Once your general liability coverage is reached, your umbrella policy can cover the additional $500,000.
• Example 2: Major auto accident—If your employee causes a multi-vehicle accident while driving a company vehicle, your commercial auto policy may cover up to $500,000. If the total damages and medical costs reach $900,000, your umbrella insurance can help pay the $400,000 difference.
• Example 3: Product liability claim—Suppose a product you sell causes harm, and your product liability insurance may cover up to $2 million. If a lawsuit results in a $2.5 million settlement, your umbrella policy can help cover the excess $500,000.

Why Florida Businesses Need Extra Coverage

Florida’s legal environment and high population density can increase the risk of large liability claims.  Prestige Planning can help assess your risks and determine if commercial umbrella insurance is suitable for your business.

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If you want to financially safeguard your business from large, unexpected liability claims, commercial umbrella insurance may be a smart addition to your risk management strategy. Contact Prestige Planning today to explore your options.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.