Commercial umbrella insurance coverage protects businesses from catastrophic losses to their business. They pay claims that are higher than the coverage limits on a company's general liability, commercial automotive or employer's liability coverage.

Until recently, large corporations were the only ones that felt it necessary to include commercial umbrella insurance as part of their insurance coverage needs. Increasingly, small business owners are realizing the importance of a commercial umbrella policy. Commercial umbrella insurance provides many important benefits for the small and mid-sized business.

1. Business umbrella insurance provides larger limits than those available through standard liability insurance coverage.
2. A commercial umbrella policy provides coverage from lawsuits due to slander, libel and violations of privacy, which are not typically included under standard insurance policies.
3. Commercial umbrella insurance policies cover the cost of legal expenses, judgments and settlements, including punitive damages, if permitted in the state where you are located.

Action Steps
The best contacts and resources to help you get it done

Understand that business umbrella insurance coverage is only as good as the customer service

Umbrella insurance business coverage provides coverage in addition to the normal liability coverage. If your umbrella coverage is through the same company as your business liability coverage, your protection should be seamless. If you purchase commercial umbrella insurance coverage from a different company, it is important that the companies work together to defend, settle and pay claims.

I recommend: The first stop when shopping for a commercial insurance policy should be your state's Department of Insurance. Once you have narrowed down your choices, visit FreeAdvice to read other's experience with your choices.

Avoid under- or over-insuring with commercial umbrella liability insurance

While not as devastating as under-insuring, over-insuring is a waste of money. A well-trained insurance agent with experience insuring companies in your field is important to have the best coverage.

I recommend: The National Federation of Independent Business provides a checklist that helps you determine where your business may be exposed to risk. For more detailed assessment of your risk, contact an insurance agent that specializes in your industry. Agent and Broker, an industry trade magazine, provides a list of insurance specialties and the companies that service them.

Find competitive pricing for business umbrella insurance

Comparison shopping for insurance policies is difficult because you often are not comparing the exact same product. Before making your final decision, decide what type of coverage you need and what exclusions you can live with. Then choose the company that offers the most competitive price while offering the coverage that you need.

I recommend: There are a variety of online sites that provide insurance quotes instantly. Visit well established sites such as 2Insure4Less and Buyer Zone for quick and accurate quotes.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Some commercial umbrella insurance providers require that your standard insurance policies are written through them, but other providers will only write an umbrella policy as long as your standard insurance coverage meets their requirements.
• •  Even umbrella insurance business policies do not cover everything. Understand what exclusions are in your policy before you sign on the dotted line.
• •  While the thought of a million dollar lawsuit may seem far-fetched, the price of a commercial umbrella insurance policy is money well-spent in today's business climate.