Commercial Umbrella Insurance

What sits beneath it, more than the umbrella limit itself. Underwriters look at the underlying exposures being layered over: the class of business, revenue or payroll, the number and type of vehicles, whether there is habitational or contracting work, and the attachment point. Loss history on the primary matters, because an umbrella is priced on the tail of those same exposures. Additional layers usually cost less per million than the first, so moving from one million to two is rarely double. We can show you the increments before you choose.

Often the contract decides before the exposure does. Leases, client agreements, municipal permits, and general contractors routinely require $2,000,000 or $5,000,000 of combined limits, which a primary policy alone does not reach. The exposure argument is separate and simpler. A single auto accident involving an employee on a California freeway can produce a claim well past a $1,000,000 primary limit, and business size does not cap what an injured person recovers. Umbrella limits are usually the least expensive limits in the program.

The umbrella still attaches where the schedule says, and you own the gap. If the schedule requires a $1,000,000 general liability limit and the primary is written or reduced to $500,000, the umbrella generally does not drop down to meet it. The insured stands in the difference. The same thing happens quietly when a primary aggregate is eroded by earlier claims during the term. This is why a change to any underlying policy should be told to us before it happens, not discovered when a large claim lands.

It attaches at a stated point, and only over the policies listed on its schedule. The schedule of underlying insurance names each policy and the limit it must carry, usually general liability, commercial auto, and employers liability. The umbrella responds once one of those is exhausted by covered payments. It does not float across everything you own: a policy left off the schedule is not underlying it. Some umbrellas follow the underlying form exactly, others are broader and pick up a few things the primary does not, subject to a retention.

Commercial Umbrella Insurance generally does not reach liabilities that your underlying policies do not cover in the first place. Professional errors and omissions are the common example, and those usually require Professional Liability Insurance. Because an umbrella sits on top of the policies beneath it and follows their terms, the underlying coverage is what sets its reach.