Excess Liability Coverage for Businesses

When it comes to safeguarding their livelihood, small business owners often focus on the essentials—general liability insurance, property coverage and workers’ compensation—as these policies can offer financial safety against common risks. However, if the unexpected strikes and a catastrophic event leads to a loss or judgment that surpasses the limits of employers’ existing coverage, excess liability coverage may help cover the remaining expenses.

Understanding Excess Liability Coverage for Businesses

Most small businesses carry liability insurance with coverage limits typically capped at $1 million. This amount may seem like a substantial safety net, but consider the following example: A customer slips and falls in a store, suffering severe injuries. The resulting medical bills, legal fees and potential settlement could easily surpass that $1 million mark. Suddenly, the safety net feels more like a tightrope.

When a loss exceeds the policy limits, the financial burden falls squarely on the business owner’s shoulders. Any amount beyond the coverage becomes their responsibility. This gap can have devastating consequences, potentially bankrupting the business or forcing the owner to sell assets, dip into personal savings or take out loans. To bridge this gap, savvy business owners turn to excess liability coverage, commonly known as umbrella insurance.

How Does Business Umbrella Insurance Work?

Umbrella insurance can provide financial protection above and beyond the primary liability policies. It may kick in when the underlying coverage is exhausted. For example, if a general liability policy covers up to $1 million, an umbrella policy could provide an additional $2 million or more. In addition, umbrella insurance isn’t limited to specific risks. It can extend coverage across various liability areas, including bodily injury, property damage, and even libel or slander claims. Knowing that your business has an extra layer of protection allows you to focus on growth and operations.

Does My Business Need Umbrella Insurance?

Before purchasing excess liability coverage, assess your business’s risk exposures. Consider factors such as the industry you operate in, the size of your business and the nature of your operations. The following are some questions to ask yourself:

• What are the worst-case scenarios for my business?
• Do I have valuable assets that need safeguarding?
• How likely is it that a liability claim could exceed my existing coverage?

Umbrella Insurance for Businesses in Lake Oswego, OR

In the unpredictable world of business, excess liability coverage is more than an option—it’s a necessity. Don’t leave your financial future to chance. Contact Action Insurance Company to determine the right umbrella policy for your specific needs.

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.