Commercial Umbrella Insurance. Does you business need an commercial umbrella excess liability policy? Any company in business in today's modern world is subject to claims of wrongdoing and/or negligence. With an commercial umbrella insurance policy in place, the fallout from these types of lawsuit is minimized and mitigated.
In the litigious environment in which we live, people are seemingly looking for a reason to sue a company, business, or individual and the excess liability policy can cover damages that exceed the limits of your underlying liability insurances.
Commercial commercial umbrella insurance is excess liability that protects your business from lawsuits with rates as low as $47/mo. Get a fast quote and your certificate of insurance now.
The Insurance Services Office (ISO) Commercial Liability Umbrella is a stand-alone coverage form that contains its own coverage, exclusions, and conditions. It provides excess limits over General Liability, Automobile Liability, Employers Liability, and other underlying liability coverage forms or policies. In addition, and because it is a stand-alone coverage form, it may include coverage that underlying coverage forms or policies do not include or provide.
Accidents are unpredictable. Some accidents are very small. Others trigger catastrophic events in the lives of the injured parties. Are your policy limits sufficient to protect you if a person you injure must have multiple lifesaving surgeries or requires 24-hour care for the rest of her life? If not, your business capital could be required to make up the difference.
The commercial liability umbrella coverage form can provide the limits you hope you never have to use but that could save your business from bankruptcy. There are a number of reasons that an commercial umbrella insurance policy may be right for you. Some of them include:
Commercial liability umbrella coverage begins when your other coverage ends. Umbrella protection applies over the limits of any other coverage forms. The most common underlying coverages are:
Other underlying liability coverage may also be listed, subject to insurance company underwriting guidelines. Keep in mind that the umbrella does not respond to a coverage unless the underlying coverage form also covers it.
The insurance company pays on the insured's behalf because of bodily injury or property damage that this insurance covers. It pays only the ultimate net loss that exceeds the limits available from underlying insurance or the self-insured retention.
The insurance company also has the right and duty to defend the insured against lawsuits that seek those covered damages. This right and duty applies when the underlying insurance does not provide coverage or when the underlying limits are used up paying claims and settlements. The insurance company has the right to participate in defending any suit that seeks damages.
At its option, the insurance company can investigate any claim and settle any lawsuit that may result but:
The only other obligation or liability to pay amounts, perform acts, or provide services is as Supplementary Payments provides for bodily injury, property damage, and personal and advertising injury liability coverages.
Underlying coverage may be subject to a sublimit. In that case, there is no coverage in the umbrella for the coverage subject to the sublimit unless the sublimit is listed on the declarations as part of the underlying coverage.
Coverage applies only if the bodily injury or property damage:
Bodily injury or property damage that takes place during the policy period and that no insured knew about before the policy period began includes any continuation, change, or resumption of that injury or damage after the policy expires. Bodily injury or property damage is determined to be known at the earliest date that any insured:
Bodily injury damages include damages that any party claims for care, loss of services, or death of the injured person.
Now more than any time in history, people are more than glad to lodge a complaint against a business, even if the complaint has little or even no merit. When an individual feels wronged or jilted in some way, the first thing that comes to mind is to make the company offending them pay. Many people see a business as having deep pockets, even if the business is small and doesn't have a lot of revenue. With business commercial umbrella insurance, your business enjoys a heightened level of protection from such claims, and should your business find itself paying an exorbitant amount in a claim, this insurance can be invaluable.
A commercial agent working with experiencing writing business policies is a go-to source for getting the right commercial umbrella insurance policy. An agent with experience can be helpful in recognizing the risks that your business faces and helping you to find the right level of protection to put a shield between you and potential litigants.
Lawsuits in the business world are filed each and every day. Do you know your own business' risks?
Big businesses are not alone in their risk for legal action against them. Small businesses and mid-sized enterprises are also vulnerable, perhaps even more so. Any business of any size can be targeted, and even a minor lawsuit can cost a lot of money to dispose of, including legal fees for representing claims without merit.
Some scenarios that often leave businesses at risk of being sued include:
These are real world examples of accidents that have occurred and been adjudicated in a court of law. It is impossible to know in advance if an event will occur, which is why an commercial umbrella insurance policy makes sense. The policy kicks in to pay any excess liability not covered by your standard business insurance policy.
While an LLC structure provides some protection to businesses when it comes to such claims, there is also such a thing as 'piercing the corporate veil.' In this instance, if the plaintiff can provide evidence that the LLC and business owner were inseparable, then the business owner can be held personally liable, leaving his personal assets open to seizure.
Because of this, even if your business is set up as an LLC, having that extra layer of protection in place can be fundamental to keeping your business on the right track and progressively growing, even in the face of claims.
Commercial Umbrella - The commercial liability umbrella coverage form is complete. It has its own insuring agreements, exclusions, conditions, limits, and definitions. It refers to the underlying coverage forms or policies but the insurance it provides is based on the coverage form itself.
Excess Liability - Excess policies are dependent policies. They are based on the underlying coverage instead of having their own insuring agreements, exclusions, conditions, and definitions. They do not add to that underlying coverage.
Umbrella policies were originally designed to offer additional limits and cover some of the gaps in the underlying coverage. They were not simply increased limits silos. They also provided a canopy or an umbrella that offered the insured a measure of protection from certain limitations in the underlying. If the umbrella covered something that the underlying did not cover, the insured paid a self-insured retention, usually in the range of $10,000 to $50,000, and then had coverage up to the umbrella's limit.
However, as primary commercial general liability coverage forms and policies became broader, the umbrella's additional coverage was reduced. It did not change but its coverage became narrower because the primary commercial general liability coverage became broader.
From the insured's perspective, there are no surprises or excitement in excess coverage forms and policies. All coverage disputes arise from the underlying coverage. Once the primary coverage is determined, the excess follows form by providing additional limits up to its ultimate limit. Excess coverage allows easy comparisons based purely on price and capacity.
From the insurance company's point of view, excess coverage forms, and policies can be very exciting, and this is one reason why they may be more difficult to obtain. The insurance company must review and underwrite the underlying coverage and decide if it wants to assume the coverage provided. This is especially problematic when the underlying coverage forms, or policies are non-standard or have unique or manuscript coverages and endorsements.
Umbrella underwriters are more confident when they price commercial liability umbrella coverage because they deal with their own coverage form. They do not have to take the extra step to research or analyze another carrier’s underlying coverage forms or policies.
National Union Fire Insurance Company (National) provided Motiva Enterprises, LLC (Motiva) a $25 million layer of liability coverage. National was sued by Motiva when, after a large loss, the insurer refused to provide coverage.
Motiva, after a negotiation it handled without National, settled a loss with a couple who sued for the injuries the husband suffered in a Motiva refinery explosion (an acid storage tank erupted). Before that settlement, National had offered to defend Motiva against the claim, subject to a reservation of rights. Motiva settled the loss for nearly $17 million and then asked National for reimbursement. After National denied the claim, based on breach of their policy's consent-to-settle and cooperation provisions, Motiva sued the insurer.
Motiva asked a court to rule that the company did not breach the policy. It argued that, since National only offered to defend them under a reservation of rights, it was no longer bound to fulfilling any other policy provisions. The court ruled against the manufacturer and Motiva appealed.
The higher court reviewed both parties' arguments. Motiva stated that there was no breach since its insurer did not offer an unqualified legal defense of the claim. Motiva also argued that, according to state law, the insurer could not refuse to pay the claim unless it proved that its rights were prejudiced. National countered with its position that it still had the right to be involved with any settlement discussions. It also argued that Motiva's action was prejudicial and that Motiva also failed to cooperate with the insurer.
The records showed that Motiva requested that National send a representative to a mediation between Motiva and the injured party. However, Motiva asked the representative to leave the meeting. Afterwards, without the National representative present, Motiva finalized the loss settlement. Prior to the settlement, Motiva had also refused to provide National with copies of legal paperwork related to the claim it just agreed to settle.
After reviewing several related cases, the court held that National's choice to reserve its rights did not affect its requirement that an insured seek permission before agreeing to a settlement. The court also held that the insurer was justified in expecting the insured to cooperate with its efforts to investigate the claim. The higher court viewed Motiva's unauthorized settlement as prejudicing National's rights. The lower court ruling in favor of the insurer was affirmed.
(Motiva Enterprises, LLC, Plaintiff-Appellant, v. National Union Fire Insurance Company of Pittsburgh, Pennsylvania, Defendant-Appellee. U.S. Court of Appeals, 5th Circuit. No 05-20139. Filed March 28, 2006.)
A three-year-old girl was permanently injured when thrown from a moving car driven by her mother. Claims in behalf of the girl were settled with all defendants except the manufacturer of a lock and handle that secured a rear-hinged door, from which the girl was apparently thrown.
The record revealed that the lock manufacturer's primary insurer repeatedly refused to settle before trial within its $300,000 general liability policy limit. When the insured settled during trial, the primary insurer contributed its $300,000 policy limit and the insured's excess insurer contributed $1,125,000 of its $2 million excess policy limit.
The excess insurer assigned to the injured girl its right of equitable subrogation against the primary insurer. In the ensuing litigation, the trial court granted summary judgment for the primary insurer and dismissed the case. It concluded that an action of this type required that there had been a judgment against the primary carrier's insurer in excess of the policy's limits; not the case here. Its decision was also influenced by the fact that the jury in the underlying personal injury lawsuit had not assigned a degree of liability to the lock manufacturer, as it had to the car manufacturer and driver. The injured girl appealed the decision on her equitable subrogation action.
It was the duty of the appeal court to decide ". . . .whether the absence of a judgment in excess of (the insured's) primary policy limits, and the underlying jury determination absolving (the insured) of responsibility for (the girl's) injuries, preclude the (injured girl's) subrogation action."
The court noted that the primary insurer had rejected a $125,000 settlement offer before trial, offering $7,500 instead. It increased its offer to $25,000 during trial. It did not communicate these offers to the insured or the excess insurer, nor did it inform them of the progress of the litigation. The court said that the excess insurer would have paid nothing if the primary insurer had settled for any of the amounts offered.
The primary insurer cited cases requiring a prior excess judgment as a prerequisite to bad faith suits by insureds against their insurers. They required the showing of the existence, not actual payment, of an excess judgment. The appeal court said that "in the equitable subrogation context before us, the excess insurer must show it actually paid an amount in excess of the primary insurer's policy limits." The existence of an excess judgment was found not to be a prerequisite.
The judgment of the trial court was reversed in favor of the injured girl and against the primary liability insurer.
(Fortman, Plaintiff, Appellant V. Safeco Ins. Co. Of America, Defendant, Respondent. California Court Of Appeal, Second District, Division One. No. BO43643.)
Perhaps you have the next great idea for a product or service that you know will appeal to your local area. Maybe you want to contribute to the economic growth of your community. Whatever the reason is, if you're thinking about starting a small business, it's important to understand pertinent information relating to small businesses in the United States; namely economic information and insurance regulations. After all, if you want your small business to succeed, you have to understand the economic trends organizations of a similar size in your area.
Likewise, you want to ensure that your small business is well protected with the right business insurance and that you are in compliance with the rules and regulations that pertain to commercial insurance in your region.
Read up on economic statistics and insurance information that relates to small business owners in the United States.
Here's a look at some information that was compiled by the Small Business Association (SBA) regarding the economic data that pertains to small businesses in the United States:
In the business world, there are many risks faced by company's every day. The best way that business owners can protect themselves from these perils is by carrying the right insurance coverage.
The The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight.
Commercial insurance is particularly important for small business owners, as they stand to lose a lot more. Should a situation arise - a lawsuit, property damage, theft, etc. - small business owners could end up facing serious financial turmoil.
According to the SBA, having the right insurance plan in place can help you avoid major pitfalls. Your business insurance should offer coverage for all of your assets. It should also include liability and casual coverage. The SBA recommends the following insurance plans for small business owners:
Protect your company and employees with the right commercial insurance policies. Read informative articles on small business insurance coverages - and how they can help shield your company from legal liabilities.
Your small business faces many potential disasters including: fire, floods, theft, equipment breakdown, lawsuits from clients or customers and current & former employees. Any many other risks you haven't even thought about.
A small business commercial insurance program should provide protection for both larger and smaller disasters. The obvious things like fire, flood and theft most business owners think about... but what if a hacker infects your computers with a virus - and files containing private customer information like credit card and Social Security numbers are stolen?
Who is going to pay to fix your customers credit rating etc...? Will your insurance pay for the cost? You need to know that.
Your commercial insurance program should cover events that can close down your company, or cause it to lose revenue. Anything less than that is not enough coverage. Commmercial insurance doesn't cover everything, and all policies have exclusions and limits.
You need a written plan that allows you to get your operations back up and running as quick as possible.