Commercial Umbrella Insurance discounts and questions
A second layer of liability limit above your general liability, commercial auto and employers liability policies that pays once one of them is exhausted by a claim. Bought in round increments, priced on the exposures underneath it, and often demanded by contracts before work can start.
Discounts carriers commonly offer
- Same carrier as the underlying package
- Writing the umbrella with the carrier that holds the general liability or auto policy simplifies claims and is usually priced lower.
- Fleet safety programme
- Documented driver screening, motor vehicle record checks and telematics on commercial vehicles, since auto losses drive most large umbrella claims.
- Written safety and contract procedures
- A safety manual, subcontractor agreements with insurance requirements, and certificate collection from subs.
- Higher underlying limits
- Carrying more primary limit than the umbrella carrier's minimum lowers the umbrella rate because the layer attaches higher.
- Claims-free history
- No large liability losses over the carrier's look-back period, verified with loss runs.
Questions people ask
The contract asks for a limit our general liability does not have. Do we raise that limit or buy an umbrella?
Usually the umbrella. Primary carriers cap what they will write per occurrence, and above that point an umbrella is priced lower per unit of limit because it is rarely reached. The exception is a contract that requires the higher limit on the general liability policy specifically, which some public works agreements do. Send us the insurance section of the contract and the analysis will show which structure satisfies it at the lower cost.
Do we need a commercial umbrella if we already have a personal umbrella?
Yes, if the business has its own liability policies. A personal umbrella sits over personal auto and homeowners policies and excludes business activities. It will not respond to a suit against the company or to a crash in a company truck, and it cannot be certified to a customer.
Why does the umbrella carrier care what my auto and liability limits are?
Because the umbrella is priced on the assumption that it starts paying only after a specific amount of primary limit is gone. If the underlying policy is lower than scheduled, the umbrella still attaches at the scheduled point and you owe the difference personally. It is also a condition of the policy that the underlying coverage stays in force for the whole term, so a mid-term change to the auto policy needs to be reported to the umbrella carrier too.
How much umbrella limit does a small business need?
Start from the largest limit any current contract or lease requires, then consider what a serious injury from your operations would cost to defend and settle. A business with vehicles on the road has a materially larger exposure than an office. Suppose a delivery company carries an auto liability limit of one million dollars and a customer's terms require five million in total; the umbrella would be written at four million above the auto policy, and the analysis would check that the general liability and employers liability limits meet the same carrier's minimums.
Does the umbrella pay defence costs?
Once the primary policy's limit is exhausted, most umbrella forms take over the defence and pay those costs in addition to the limit, though some pay them within it. On a true umbrella responding to a claim the primary policies do not cover, defence starts after the self-insured retention. The wording differs by carrier and it is one of the items the analysis compares.