Homer Smith Insurance Blog

If you run a business, you should understand the benefits and potential limitations of excess liability insurance also generally called commercial or business umbrella insurance. This secondary "excess liability" policy protects business owners from lawsuits with settlements that exceed their general business policies. Some businesses where large numbers of people gather and there is a potential for harm are at especially high risk of being sued for large amounts- bars, restaurants, and large office buildings are examples. 

In any business, accidents can happen that may not be directly your fault, but a court may decide that you are responsible for the financial damages. Excess liability insurance usually covers a variety of situations, including personal injury, contractual liability, liquor law liability, and extension of coverage to other insured parties like employees and business partners. It kicks in when the limits of your primary liability are used up. It’s an important coverage that can potentially save you thousands. Umbrella insurance policies often start at a $1 million limit and increase from there, depending on your assets and risk.

Any liability policy, including commercial liability umbrella has to restrict its coverage to handling the type of losses it was created for.  Typically these policies contain provision that govern losses involving contractual liability. Like a real umbrella in a rainstorm, you stay dry when you stay under the umbrella.  In other words, you need to be careful when considering extending contractual protection to others under the assumption it will be covered.  Umbrella policies may ignore losses created by an agreement an insured makes with other parties, particularly if that agreement is for activities unrelated to the company’s business purpose.  For example, a cleaning company may agree to be responsible for any injury or damage that occurs while their employees are at work on a company premises.  If the cleaning crew is in the building at a time the third party vandalizes part of the premises, the umbrella insurer may not defend the claim under a contractual liability exclusion. 

A commercial liability umbrella is written to control the loss exposures that it covers and designed to deal with the realities of the business world. Your umbrella policy limits and terms can vary across different insurance providers and you may want help determining which policy is best for you.  At Homer Smith Insurance, we can help you find appropriate business insurance in Washington.  We will discuss your company’s budget and specifics to help you determine if excess liability is right for your business and work hard to find you the right coverage at the right price.  . We want you to be confident that your company is well-protected and have the peace of mind that comes with having appropriate excess liability protection.