Let’s paint a picture. You own and run a small convenience store. You have a business owner’s policy with a million dollar limit for an incident involving one person, and a cap of $3 million for incidents involving multiple businesses.

A high-powered, high-paid graphic artist comes into the store on a rainy day. She slips on the way out on the wet floor tracked in by other customers. When she falls, she breaks her clavicle, elbow and arm. You wisely called 911. They whisk her to the hospital and you call your liability insurance company.

The costs she submits to your insurance company are.

Ambulance: $1,200

Trauma room fees: $85,000

Surgery and hospital stay for one week: $78,000

Rehabilitation fees, current and future: $100,000

Current lost wages: $45,000

This rings up to a grand total of $309,200.

Lucky for you, it seems your insurance will cover you completely. But don’t get your hopes up yet! As the mobility in the woman’s right arm has been forever limited, she is also suing you for $5 million for future lost wages. If she wins, your business could close, as your insurance is woefully inadequate for this situation. Fortunately, it doesn’t have to be this way. Purchase a commercial umbrella insurance policy that extends the limits of your liability and you can extend your liability limits to $5 million, or even higher.

What Commercial Umbrella Insurance Does

Commercial umbrella insurance is also referred to as “excess commercial liability insurance.” If you have claims that exceed your property and bodily injury limits, the umbrella insurance picks up where your business liability insurance coverage limits end. In doing so, the purpose of business umbrella insurance has three important purposes:

1. It continues to pay for your legal liabilities when your general business insurance liability insurance reaches its policy limit.
   
   
2. It starts coverage when the limits of your business insurance (the underlying policy) are reached from payment of prior claims during the policy year.
   
   
3. It offers protection to your business for certain liabilities that you are not insured for, subject to the assumption by the named insured of a self-insured retention.

Realistically, a complete commercial liability umbrella policy covers you for almost anything you can think of.  Speak with your trusted business insurance advisor for a policy review and choose an umbrella policy that make sense for you.