Commercial Umbrella Insurance

The Commercial Umbrella policy may be one of the most important and critical coverages an insured must buy. The umbrella coverage protects the insured from catastrophic third party loss and acts as the secondary responder when the underlying limits are exhausted. This component is critical because the umbrella policy provides another layer of limits above the commercial auto policy, general liability policy, EPL policies and more. The absence of an umbrella policy jeopardizes the insureds business assets if the claims are not fully covered within the underlying limits.

Key Umbrella Coverage Concepts

Depending on the coverage form and carrier, a true umbrella policy provides three important functions:
  1. Provide higher limits in the event of a large loss
  2. Provide limits when an underlying policy has aggregate limits that have been exhausted.
  3. Provides broadened coverage not provided by underlying policies. This last function is known as a drop down coverage and is very important.
Another component of the umbrella policy is known as “attachment points” which is when the required underlying policy limits meet the contractual requirements for umbrella coverage to respond.

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