Just as personal umbrella policies are available to cover the catastrophic liability exposures of personal risks, high-limit Commercial Umbrella policies are designed to provide catastrophic liability coverage for business risks. Because the umbrella policy is not designed to handle usual or everyday exposures, the insured must have underlying liability coverage, such as Commercial Auto or Commercial General Liability coverage, before an Umbrella policy will be issued.
A commercial umbrella policy provides coverage in three types of situations:
1. The policy limits applying to a loss under an underlying policy have been exhausted.
2. A loss is excluded under an underlying contract but not excluded under the umbrella (the insured must first meet the retention limit)
3. Previous losses reimbursed under an underlying policy have reduced its aggregate limit so that a subsequent loss is not fully covered.
If you own a business, it is a wise decision to have an umbrella policy because if something were to go wrong, you’d have peace of mind knowing you’ll be covered.
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