Primary insurance policies help protect businesses from a range of potential risks, but there is usually a limit to how much protection any one primary policy will offer. Massachusetts businesses that want more coverage than their primary policies will provide might be able to supplement those policies with a commercial umbrella insurance policy.
Commercial umbrella insurance is a secondary form of liability coverage. It normally supplements primary, or “underlying,” insurance policies.
Liability lawsuits can be extremely expensive, and almost any business can be sued by an employee, vendor, customer or organization. For these reasons, many businesses in Massachusetts may benefit from getting business umbrella insurance. Businesses in high-risk industries, those who have limited resources and those who are potential targets of opportunistic lawsuits might get a policy, but so too might any other business.
Professionals who run their own businesses also can benefit from having business umbrella insurance in place. In many cases, the insurance is especially suitable for professionals’ businesses because these businesses often are smaller and don’t have a lot of resources to fight a major lawsuit.
Nonprofits likewise might want a business umbrella policy. They’re sometimes exposed to substantial risk by the work they do, and many nonprofits don’t have a lot of free financial resources at their disposal.
Because they’re secondary insurance policies, commercial umbrella policies normally are often very affordable. In many cases, insurance companies are able to offer high limits for comparatively small premiums.
Excess liability insurance is another form of secondary insurance coverage, but it differs from commercial umbrella coverage in important ways.
Most excess liability policies adopt the terms and conditions of an underlying policy that they supplement. As a result, they normally don’t broaden coverages and can usually only supplement a single underlying policy.
Commercial umbrella policies typically come with their own terms and conditions. This allows them to supplement multiple underlying policies simultaneously, and they sometimes even fill in gaps in coverage that primary policies leave.
Commercial umbrella policies frequently come with underlying limits and self-insured retentions. These requirements aren’t completely identical, but they are similar to each other.
Underlying limits are generally minimum primary coverage requirements that must be in place. These limits help ensure that an underlying policy is in place to pay the first portion of covered claims.
Self-insured retentions are generally amounts that businesses must be prepared to pay before an umbrella policy will offer any coverage. These are typically used when an umbrella coverage fills in gaps that primary policies leave.
Failing to meet a commercial umbrella policy’s underlying limits and/or self-insured retentions can jeopardize the policy’s coverage, so it’s important to make sure all required underlying protections are in place. An insurance agent who specializes in commercial umbrella policies will know how to check for these types of requirements and make sure everything is set up properly.
For help finding commercial umbrella insurance that’ll give your Massachusetts business extra protection, contact the insurance agents at John P. Russell Insurance. Our independent insurance agents know how to compare these types of policies, and they can help you review quotes from multiple insurance companies in the state. With their help, your business can get a policy that provides robust protection and has all the necessary underlying protections in place.
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