How Umbrella Liability Insurance Fills The Gap
Because one size never fits all, umbrella liability insurance provides businesses with an extra layer of coverage over and above standard liability policies.
The International Risk Management Institute (IRMI) notes that umbrella liability insurance “provides excess limits when the limits of underlying liability policies are exhausted by the payment of claims; it drops down and picks up where the underlying policy leaves off when the aggregate limit of the underlying policy in question is exhausted by the payment of claims; and it provides protection against some claims not covered by the underlying policies, subject to the assumption by the named insured of a self-insured retention.” 1
Essentially, umbrella liability insurance is designed to protect your assets by kicking in when your primary commercial general liability coverage is exhausted. Adding umbrella liability insurance or excess liability insurance layers is like building a tower with blocks. Each block represents a layer of protection that is triggered if the limit in the underlying policy is used up.
More Than Just For Rainy Days
Unfortunately, accidents happen. These days, it’s not uncommon for jury awards and out-of court settlements to run into millions of dollars.
A typical Canadian business carries between $2,000,000 to $5,000,000 in primary commercial general liability limits, but with some personal injuries claims exceeding $10,000,000 in Ontario, the typical limit might be insufficient and umbrella liability insurance should strongly be considered.
In the event that your organization is found legally responsible for injuring someone or damaging their property, without umbrella liability insurance, anything beyond the limits of your standard commercial general liability insurance coverage will come out of your own pocket.
While it’s difficult to pinpoint the exact monetary consequences of the risks you and your employees take each day, are you certain that your current business insurance offers sufficient protection? With umbrella liability insurance, you can fill any gaps.
Umbrella Liability Insurance – Key Questions
When selecting a limit for your business, you’ll want to consider:
- Do customers regularly visit your location(s)?
- Does your profession, industry, location or the products you make or sell make your business an easy target for a big settlement?
- Do other companies in your industry carry higher limits? If so, why?
- What is the cost for additional umbrella liability insurance limits?
Additional umbrella liability insurance can be relatively inexpensive when compared to the added coverage and peace-of-mind you gain. The cost for each million dollars of umbrella liability insurance coverage decreases with every million dollars of coverage purchased.
An ALIGNED advocate can help you assess the amount of umbrella liability insurance your business needs to fill any liability gaps. Talk to one of our advocates today about how we can help you secure the best products, services and insurance solutions for your business.
| ALIGNED Across Canada 100% Canadian owned, ALIGNED is a premiere insurance brokerage that serves more than 1,400 clients across the country. ALIGNED’s offices in Toronto, Calgary and Vancouver are supported by a national operations centre in Cambridge, Ontario. Uniquely within the industry, ALIGNED creates, negotiates and delivers the best business insurance and risk management strategies/solutions to organizations like yours. |
Sources: 1 IMRI.com
