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Business Protection Bulletin

Do umbrella policies broaden my business automobile and general liability coverage?

By April 1, 2014No Comments

Yes. The most obvious addition is worldwide coverage for automobile liability. Typical business automobile policies cover drivers in the United States, its possessions and Canada. The umbrella policy does not have this restriction.

Umbrellas serve to add layers of liability in one million dollar increments. These layers are written in excess of your general liability and automobile policies. If you have watercraft or aviation policies, the umbrella layer covers in excess of those policies too.

Umbrellas broaden the general liability policy too. Some general liability policies do not cover the peril of sexual harassment, for example. Umbrella policies do. When these claims occur, you would be subject to a retention, similar to a deductible.

A deductible is when you pay the first few dollars of a claim, but claims administration and legal fees are not included as subject to a deductible. With a retention, these administrative and legal costs are subject to your first dollar payment.

So, how does this work?

A business has a $500,000 limit on automobile insurance and $2,000,000 on general liability with a one million dollar umbrella. They have an automobile claim that settles for $1,300,000. Their automobile liability pays $500,000 plus claims and legal costs; and the umbrella pays $800,000. The business pays nothing out of pocket.

The same business suffers an excluded general liability claim in a foreign country and the courts order $250,000 damages. The general liability policy does not pay any of the claim because the act is excluded. The business pays their retention of ten thousand dollars. The umbrella pays $240,000 plus court and claims costs.

The umbrella policy, after the retention amount, pays for all legal defense costs worldwide. Anyone traveling outside the borders of the United States and Canada should seriously consider an umbrella policy.

Umbrellas provide important increases to liability limits at home. Call us for details and a quote.