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Commercial Umbrella Insurance Explained + Top Policies 2024

Plans start at less than $50/month*

*Applies to quotes made through Insureon only. Average monthly premium calculations are estimates and may vary by state, insurance provider, and the nature of your business. Where required or allowed by state law, insurance taxes, service fees, and other surcharges may be included and billed separately from the premium.

Quotes available through: Insureon
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  • Umbrella insurance in the simplest terms is “optional extra coverage”.
  • Commercial umbrella insurance is a flexible and dynamic coverage that kicks in to continue protecting your business if you max out your claims limit on certain types of existing insurance policies.?
  • Umbrella insurance will extend the limits of your general liability, employer liability, and commercial auto insurance past the $2 million mark once you hit your limit.?
  • Umbrella insurance is unique in the sense that it’s a single policy that can extend liability limits on multiple policies.
  • Umbrella insurance is not a standalone coverage, and therefore, it can only be purchased on top of a general liability, employer liability, or commercial auto insurance plan.?
  • On average, commercial umbrella insurance costs about $75 per month for each $1 million of additional coverage.
  • We recommend using our online tool to find the umbrella insurance plans that fits your specific business needs. By answering a few questions (business size, industry, location, etc.) you’ll be matched with the right insurance plans for your business.

Depending on the size of your business, your industry, number of employees, and more, you may need umbrella insurance for extra coverage.?

While umbrella insurance may not be a good fit for all types of businesses, it can be well worth the cost if you meet the requirements.

In this guide, we’ll cover our top choices for umbrella insurance providers as well as answer the most important questions regarding this type of business insurance to help you know if it may be a good fit for your small business.?

We’ll cover:

  • The basics of umbrella insurance and how it works
  • What it covers and doesn’t cover
  • How to know if you need umbrella insurance
  • How much it costs and what factors determine this cost
  • If it’s worth it?
  • Best types of business insurance to consider as alternatives

Our recommendation for commercial umbrella insurance:

Advertiser Disclosure

Insureon Business Insurance

Better Business Bureau Rating
A+ (Superior)
Specialized for:
Plans from top providers in America

Why We Like It

Insureon makes it extremely easy for small business owners to compare and buy business insurance online offering policies from over 30 top brands.

  • Insureon is America’s largest online provider of small business insurance
  • Policy options from major insurance brands in America
  • Offers quick and easy same-day certificate of coverage
  • Human advisors answer your policy questions and doubts
  • Human touch & personal relationship despite being online
  • Saving time lets you focus on building your business

Did you know? \Over 90% of small business owners don’t understand what coverage they need. \Insureon solves this with a team of best-in-class advisors specialized in micro businesses to help you understand coverage options.

Insureon saves you from personally having to speak to multiple companies to compare insurance.

How Insureon works:

  1. By questionnaire, you answer a few simple questions about your business, industry, & location.
  2. Get quotes back in seconds from America’s top insurance providers with real-time prices & plan information.
  3. Select the coverages that best fit your needs.
  4. An insurance agent will review your selected coverage and check if it makes sense for your business/profession before contacting you.
  5. The agent will reach out to you personally + walk you through your coverage + answer any questions and concerns about the policy + make sure you have the type of coverage you need.
  6. You’ll get same-day or next-day coverage with a certificate of insurance you can easily download and sign.

Coverage Highlights

Types of insurance available through Insureon:

  • Business Owner Policy (BOP)
  • General Liability Insurance
  • Workers’ Compensation Insurance
  • Errors & Omissions / Professional Liability Insurance
  • Cyber Liabilty Insurance
  • Commercial Property Insurance
  • Commercial Umbrella Insurance
  • Commercial Package Insurance
  • Commercial Auto Insurance
  • Findelity Bonds / Employee Dishonesty Insurance
  • Inland Marine Insurance
  • Management Liability Insurance
  • And more…

Plans from major providers including:

  • Progressive
  • Nationwide
  • Liberty
  • Travelers
  • Hiscox
  • Chubb
  • Hartford
  • Philadelphia
  • Hanover
  • And more…

What is commercial umbrella insurance?

Umbrella Insurance is a type of add-on to a main insurance plan that can extend your coverage past the maximum limits if you ever happen to max out on a claim.?

Umbrella insurance is unique as it’s a single policy that can extend the limits for multiple types of insurance including:?

  1. General liability insurance
  2. Employer liability insurance (often included in workers’ comp plans)
  3. Commercial auto insurance

This type of plan acts as a metaphorical umbrella in the sense that it can extend the limit on any of these plans whenever it is required.?

Think of it as an insurance limit watchdog. If you ever reach your claims limit on one of these 3 policies, umbrella Insurance will kick in and pay the excess up to your umbrella policy limit.?

Umbrella insurance vs. excess liability insurance

Umbrella insurance is similar to another type of insurance called excess liability insurance. However, excess liability insurance only extends your coverage to one policy. Therefore, umbrella insurance is more comprehensive as it can extend several policies at once.

Who is commercial umbrella insurance right for?

Umbrella insurance is ideal for companies that may face claims above $2 million, or work in an environment where the risk of injury to employees and third parties is higher.?

Typically, there is a minimum coverage level you must meet on your main insurance plan to be eligible for umbrella insurance. Therefore, this type of insurance may not be right for all companies – for example, some micro-businesses.

Ask yourself these questions to help determine if you need umbrella coverage:

WORKPLACE & EMPLOYEE RISK?

YOUR BUSINESS

INDUSTRY

If you answered yes to any of these questions, you may want to look into an umbrella insurance plan for your company. You can get a list of plans that match your company’s needs using our online quote tool.?

If you are unsure of whether this type of insurance is right for you, a licensed insurance agent can guide you in the right direction.?

What does commercial umbrella insurance cover?

Umbrella insurance will cover things that are included in general liability, commercial auto, and certain parts of workers’ compensation policies. However, it does not cover claims related to other types of insurance like commercial property insurance or errors and omissions insurance.?

Here is a quick look at what is covered and what is not covered with commercial umbrella insurance:

COVERED:
  • Injuries to third parties visiting premises
  • Damage to property of third parties
  • Injuries to employees on-premises or in the field
  • Injuries or damage from products you sold
  • Company auto accidents & injuries
  • Wrongful termination lawsuits
  • Defamation, Libel, Reputational damage
NOT COVERED

Here is a real-world example:

Imagine you own a computer repair business, and your customer leaves their expensive computer to be repaired at your office building. Imagine your employee slips on a wet floor, falls and injures their back, and knocks your customer’s computer onto the floor damaging it beyond repair.?

In this scenario, facing multiple claims from both your employee and your customer, your umbrella insurance could fill the gap if your limits are maxed out – covering:

How much does commercial umbrella insurance cost?

The cost of insurance is always proportional to the amount of risk your company faces.

According to sales data from Insureon, Commercial umbrella insurance costs an average of $75 per month for each $1 million increment based on sales data from Insureon. That said, plans can be even cheaper depending on your company parameters.

Umbrella coverage starts at under $50/month*

*Applies to quotes made through Insureon only. Average monthly premium calculations are estimates and may vary by state, insurance provider, and the nature of your business. Where required or allowed by state law, insurance taxes, service fees, and other surcharges may be included and billed separately from the premium.

Note that your costs may vary significantly based on the following factors:

1

Your Industry

Some industries are riskier than others. For example, if you work with hazardous chemicals, you’ll pay more for umbrella coverage than you would if you run an online business remotely.

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2

Your Aggregate insurance limit

Your aggregate limit has a big impact on how much you pay for coverage. For example, if you purchase $5 million in coverage, you’ll pay more than someone with coverage limits of $1 million.

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3

The number of employees you have

Risk increases as you onboard more employees. Therefore, your coverage limits may also need to increase which can raise the cost of your policy.

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4

The number of vehicles in your fleet

If you have a fleet of vehicles, your auto insurance may not provide adequate coverage. Therefore, there’s a greater risk that you’ll need to use your umbrella policy to fill in the gap. More vehicles mean a higher cost for umbrella coverage.

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5

Contact with customers or your property

You can expect to pay more if you welcome customers to your place of work or handle a lot of customer property as part of your business. For example, if you run a computer repair service, you’ll need extra coverage for customers’ computers, printers, servers, and other items.

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Discover your ideal policy in minutes Unlock plans from over 30 top providers, now! Suitcase and Shield With Checkmark GET PRICES

Understanding business umbrella insurance limits

Umbrella insurance is sold in increments of $1 million limits.?

Therefore, when choosing your umbrella policy limits, you will need to consider the limits on your main underlying insurance policies plus however many additional “million dollar limits” you will need versus potential claims amounts.?

Here is a short calculation you can use to understand what type of limits you may need:?

Potential Claim Amount – Underlying Policy Limit = Minimum Umbrella Insurance Limit?

For example, if your general liability policy covers up to $2 million but you could face claims up to $4 million, then you should consider boosting your coverage with a limit of at least $2 million of umbrella insurance for a total coverage of $4 million.?

Is commercial umbrella insurance worth it?

Umbrella insurance can be well worth it if you work in a high-risk environment and your business is large enough to require umbrella insurance.?

Buying umbrella insurance is usually cheaper than raising the limits of each of your insurance policies. Therefore, when it comes to price, umbrella insurance is worth the cost.?

If you don’t think your business would survive a lawsuit or a major loss given your current insurance limits, then it could be a good idea to purchase umbrella coverage. Otherwise, you may want to use the money to raise your existing limits or purchase extra types of insurance coverage.

Umbrella insurance may not be worth it if:?

Alternatively, if your liability policy has adequate coverage for these circumstances, you may be better off using the money you would have spent on umbrella insurance to grow your business.

Drawbacks of umbrella insurance

The main drawback of umbrella insurance is that it does not extend all types of insurance limits. For example, umbrella insurance does not cover claims relating to commercial property damage or professional liabilities.?

Additionally, umbrella insurance doesn’t work as a standalone policy. Therefore, you must have liability insurance before you can add umbrella insurance to your policy.

Discover your ideal policy in minutes Unlock plans from over 30 top providers, now! Suitcase and Shield With Checkmark GET PRICES

FAQs about commercial umbrella insurance

Can an LLC have an umbrella policy?

Yes, a limited liability company can have an umbrella policy. An LLC is a business structure that allows you to separate your personal assets from your company assets. If someone sues you, this may prevent you from losing your home, vehicle, and other personal property. Although an LLC provides some protection, you may need an umbrella policy to guard against significant financial losses.

Is an LLC better than an umbrella policy?

It depends on the situation. If your LLC has assets worth $200,000 and you settle a lawsuit for $20,000, you have enough to cover the settlement without going bankrupt. If the settlement is $250,000, however, you wouldn’t have enough business assets to cover it. In that case, you’d benefit from having umbrella insurance. Therefore, pairing an umbrella policy with general business insurance gives you the broadest coverage.

Is an umbrella policy with insurance worth it?

This depends on your business needs, but if your business is a candidate for umbrella insurance then it’s absolutely worth the cost. Umbrella insurance extends multiple coverage types in a single plan which means it’s great for a wide range of circumstances.

In general, insurance is something you only appreciate when it comes time to use it. It’s important to remember that if your main business insurance policy has limits that may not be enough to pay a legal settlement, replace damaged property, or cover the costs associated with a business interruption then umbrella insurance could be an option.

Leigh Morgan
Leigh Morgan Personal Finance

Leigh Morgan is a seasoned personal finance contributor with over 15 years of experience writing on a diverse range of professional legal and financial topics. She specializes in subjects like navigating the complexities of insurance, savings, zero-based budgeting and emergency fund development.

In the last five years, she’s authored over 300 articles for credit unions, digital banks, and financial professionals. Morgan is also the author of “77 Tips for Preventing Elder Financial Abuse,” a book focused on helping caregivers protect the elderly from financial scams.

In addition to her writing skills, she brings real-world financial acumen thanks to her previous experience managing rental properties as part of a $34 million real estate portfolio.

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