Are you wondering if you need an umbrella policy for your LLC?
What Is Umbrella Insurance?
An umbrella policy is an insurance policy designed to extend the liability coverage provided by a standard commercial policy (e.g. your business insurance). Businesses can benefit from having an umbrella policy to cover them in case of a lawsuit. An umbrella policy goes into effect if you’ve reached the liability coverage limits of your other policies, including your General Liability Insurance (GLI) and Errors & Omissions Insurance (E&O).
What Does An Umbrella Policy Cover?
An umbrella policy can cover claims such as libel and slander, wrongful entry or eviction, malicious prosecution, shock, or mental anguish. It also can cover injuries caused by your work crew when they are operating company vehicles.
For example, if you own a publishing company and you publish a book with bad advice in it, the company could be sued if the information causes someone harm. Your LLC’s professional liability policy would cover damages if the person was one of your clients. However, if it were a non-client who bought your book at the bookstore, there would be no coverage under a standard LLC policy.
Rather than having to pay for damages out of pocket (or selling off assets to raise money), an umbrella policy will help protect you from financial harm by covering certain damages in excess of your other insurance policies up to their limits.
How Much Does an Umbrella Policy Cost?
An umbrella policy can add significant protection to your personal assets without breaking the bank. Premiums start at around $200 per year depending on your needs, but you’ll find higher rates in industries where lawsuits are more common.
An umbrella policy can be a great way to bolster your business insurance coverage. However, like any other insurance policy, you should always consider the limits of your umbrella policy and how it can help protect your company in a worst-case scenario. Since an umbrella policy doesn’t cover as many circumstances as a typical business liability policy, make sure you understand the differences between the two, take a close look at what your insurance agent promises in terms of coverage, and how much additional protection you’ll be provided with an umbrella policy.
