The One Coverage Most Business Owners Regret Not Buying

Business owners are used to buying Business Insurance policies, general liability, property, commercial auto, workers' compensation, maybe cyber liability or professional liability. But there's one question that doesn't get asked often enough:

What happens when the claim is bigger than your insurance limit?

That's where Umbrella and Excess Liability Insurance can become incredibly important.
Unfortunately, many business owners don't think seriously about higher liability limits until after a major claim occurs. And by then, it's too late.

"I Have $1 Million in Liability Coverage. Isn't That Enough?" Maybe.

A $1 million liability limit sounds like a lot of money—and for many claims, it is.
But consider what can happen when a serious accident involves:
​

• A catastrophic injury
• Permanent disability
• Multiple injured people
• A fatality
• Significant property damage
• A commercial vehicle accident
• A lengthy lawsuit

Suddenly, $1 million doesn't seem nearly as large. Imagine your business has a $1 million general liability limit and is hit with a covered $2.5 million judgment. Your insurance may pay up to the applicable policy limit.

But where does the remaining $1.5 million come from? Potentially, your business.

That's the problem umbrella or excess liability coverage is designed to address.
What Is Commercial Umbrella Insurance? Commercial umbrella insurance can provide additional liability limits above certain underlying insurance policies.

For example, a business might have:

General Liability: $1 million
Commercial Auto: $1 million
Umbrella Liability: $5 million

Depending on the policies and circumstances, that umbrella can provide an additional layer of protection when a covered underlying claim exceeds the primary policy limit. Think of it as another financial wall between a catastrophic lawsuit and your company's assets.

The more successful your company becomes, the more you potentially have to protect.
Ironically, businesses sometimes increase their insurance on buildings, equipment and vehicles as they grow while leaving their liability limits unchanged for years.

Every business is different, which means the coverage business owners regret not purchasing isn't always an umbrella. Depending on the company, the overlooked policy might be:

Cyber Liability — until ransomware shuts down operations.

Employment Practices Liability (EPLI) — until a former employee alleges discrimination or wrongful termination.

Professional Liability / E&O — until a client claims your mistake caused them financial harm.

Hired & Non-Owned Auto Liability — until an employee causes an accident while using a personal vehicle for company business.

Business Interruption Coverage — until a covered property loss prevents the company from operating.

The important question isn't: "What insurance does every business need?"

​It's:

"What could financially devastate my particular business?"

That's a much better conversation to have with your insurance advisor.

Don't Wait Until the Claim to Find the Gap.

There are few worse times to discover an insurance coverage gap than after a major loss. That's why business owners should periodically review more than just their premiums.

Ask:

Have our revenues increased?
Have we hired more employees?
Have we added vehicles or locations?
Are employees driving personal vehicles for business?
Have our contracts changed?
Are we storing more customer information?
Could a serious liability claim exceed our current limits?

Your business today may look very different from the business you insured five years ago.
Your insurance program should evolve with it.

Protect What You've Built

Most entrepreneurs spend years building their businesses. They take risks, hire employees, develop relationships, acquire assets and reinvest profits. Insurance can't prevent every lawsuit or accident. But the right insurance program can help prevent one catastrophic event from wiping out years of work. And sometimes the most valuable coverage isn't the policy you know you need.

It's the one you hope you'll never need.

Is It Time for an Insurance Review?

At Strive Insurance Group, Inc., we help business owners evaluate their insurance programs, identify potential coverage gaps and determine whether their liability limits still make sense for the business they've built today.

If it has been a while since you've reviewed your business insurance, now may be a good time to take another look.

Contact Strive Insurance Group, Inc. to review your current business insurance program and make sure you're protecting what you've worked so hard to build.

Coverage varies by insurer, policy form, limits, exclusions, endorsements and the circumstances of each claim. This article is for general informational purposes and does not guarantee coverage.