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Umbrella Insurance Coverage for Business

Having umbrella insurance coverage for your business is not only a safety net against the unthinkable happening, but also necessary for conducting regular business transactions.
Business insurance, to explain it in simple terms, is about paying a premium you can afford to cover possible costs you may not be able to afford. When you pay your premium payments to the insurance company, you are taking a risk, in so far as there are no guarantees of getting your money back. On the other hand, if you suddenly have an accident or if your office catches fire and goes up in smoke or if someone files a successful claim against your business, you have the guarantee that the insurance company will cover the often stupendous costs involved. This is what is known as liability insurance and all businesses worth their salt usually insure themselves with policies like General Liability, Employers Liability, Hired and Non-owned Auto Liability and Automobile Liability. In addition to these, you should also get an Umbrella Insurance Policy. This will provide an additional protection by extending the limits of your insurance.

Having an insurance policy helps:
Legal fee is no small matter and depending on your business and lawsuit, can even go into millions. If this happens, you will be mighty grateful you don't have to fish out the millions from your own pocket, especially if you don't have them and are required to forfeit your entire property and future inheritance to make ends meet.

Having an insurance coverage is not only a safety net against the unthinkable happening, but also necessary for conducting regular business transactions. For example, if you plan on renting your office premises, you will have to furnish an insurance certificate as a rent-money guarantee. So, if you suffer a setback and your business folds up, the landlord doesn't get to share in your loss and miss out on the rent money.

Insurance coverage:
There is a difference between property insurance coverage and liability insurance coverage. The former is based on the estimated market value of your property. The latter value is hard to pin down. There is no way of knowing beforehand how much costs you are likely to ring up if you get landed with a lawsuit or have an accident. Your general liability policies will not, of course, cover these costs. It is the umbrella insurance that will provide the required extra coverage.

Umbrella Insurance:
  • It kicks off where your other liability policies end and provides you with additional coverage.
  • It covers claims that the other liability policies may not cover, like if you get yourself involved in the wrong end of cases to do with libel or slander.
Keep in mind though that Umbrella Insurance does not normally cover the following -
  • Professional Liability Policies
  • Product Recall Coverage
  • Workers' Compensation Insurance
  • Pollution
  • War
  • Terrorism
The premiums you are required to pay depends upon -
  • The Insurance company that is offering the coverage
  • The amount of coverage that you are buying
  • Your personal reliability. If you're the sort that has a long criminal record and a short credit ranking, you will be saddled with hefty premiums.
Most businesses, especially if they are likely to get targeted often by lawsuit-happy folks, play it safe by getting insurance cover in the range of $1 million to $5 million. The cover usually carries a high deductible - that is, the amount of loss that must be crossed before the insurance company pays up - and you usually need to have other polices, like home insurance and automobile insurance to this amount. You should consider buying all your liability insurance from the same company, as this will make your financial tangles more manageable in event of disaster and you may otherwise also get some pretty good discounts on the premiums. It never hurts to ask.
By Sonal Panse
Bouquets and Brickbats