Commercial Umbrella Insurance

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Commercial Umbrella Insurance


Comprehensive Guide to Commercial Umbrella Insurance

As a business owner, you are well aware of the various risks and uncertainties that your business faces every day. While you may have taken steps to protect your business with primary insurance policies such as general liability, property, and workers’ compensation insurance, these policies may not be enough to cover all the costs associated with a catastrophic event. This is where commercial umbrella insurance comes into play.

What is Commercial Umbrella Insurance?

Commercial umbrella insurance provides additional liability coverage above and beyond the limits of your primary insurance policies, helping to protect your business from significant financial losses due to catastrophic events such as lawsuits, property damage, or bodily injury claims. These policies are usually cheaper compared to increasing the limits on standard policies, making them a cost-effective option for extended coverage.

Coverage Details

What Does Commercial Umbrella Insurance Cover?

Commercial umbrella policy coverage is designed to provide protection against catastrophic events that could potentially bankrupt your business. It typically covers:

  • Legal defense costs associated with lawsuits and other legal actions.
  • Claims exceeding the limits of your primary insurance policies, such as bodily injury or property damage claims.
  • Other losses that may be excluded from your primary policies, such as libel, slander, or invasion of privacy claims.

What is Not Covered?

Commercial umbrella insurance does not cover:

  • Damages not covered by your primary policies if the cost exceeds the coverage limits of the umbrella insurance.
  • Events that are specifically excluded from your primary insurance policies.

It’s crucial to note that the coverage limits for umbrella insurance range from $1 to $15 million. If the claim surpasses these limits, you’ll be responsible for paying the remaining costs out of pocket.

Determining Your Coverage Needs

The amount of commercial umbrella insurance coverage you need depends on the risks and exposures of your business. Consider the potential costs associated with a catastrophic event, including legal defense costs, medical expenses, and damages that could be awarded in a lawsuit.

How Much Coverage is Enough?

To determine the appropriate amount of coverage, you should:

  1. Evaluate the potential risks and liabilities your business might face.
  2. Assess your existing coverage limits to understand the gaps.
  3. Consult with an insurance agent to get a professional opinion tailored to your business.

Commercial umbrella insurance is typically sold in increments of $1 million or more. Depending on the risks and exposures of your business, you may need to purchase multiple layers of coverage to adequately protect your business.

How Does Commercial Umbrella Insurance Work?

Commercial umbrella policy coverage kicks in once the limits of your primary insurance policies have been exhausted. For example, if your business is sued for damages that exceed the limits of your general liability policy, your commercial umbrella policy coverage would provide additional coverage up to the policy limits.

Benefits of Commercial Umbrella Insurance

  • Protection Against Catastrophic Events: Provides additional protection that can prevent financial ruin.
  • Broader Coverage: Fills gaps left by primary policies, covering a wider range of losses.
  • Peace of Mind: Knowing your business is protected against unexpected, significant losses.

Cost of Commercial Umbrella Insurance

Factors Influencing the Cost

Several key factors determine the cost of commercial umbrella insurance:

  • Nature of Your Business: Industries with higher risks may have higher premiums.
  • Underlying Coverage Amount: The extent of your primary insurance coverage affects the umbrella policy’s cost.
  • Size of Your Business: Larger businesses may face higher risks and thus higher premiums.
  • Coverage Limit: Higher coverage limits translate to broader protection and may increase the cost.

By understanding these factors, you can tailor your coverage to match your business’s specific requirements, ensuring comprehensive protection while optimizing cost-efficiency.


Commercial umbrella insurance is a valuable addition to your business’s risk management strategy. By providing additional liability coverage, it protects against significant financial losses due to catastrophic events. Assess your business’s needs, understand your existing coverage, and consult with an insurance agent to determine the right amount of umbrella insurance for your business.

Contact Toby Hansen Agency

For more information and personalized advice on commercial umbrella insurance, contact Toby Hansen Agency today. Let us help you secure the comprehensive protection your business deserves.

Experience the peace of mind that comes with knowing your business is protected by one of Montana’s best insurance agencies. 


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