Commercial umbrella insurance for Michigan businesses

What is commercial umbrella insurance?

A commercial umbrella policy adds liability limits on top of the limits in your underlying policies, such as general liability, commercial auto and the employers liability part of workers’ compensation. When a covered claim exhausts an underlying limit, the umbrella pays the rest up to its own limit. In some cases, an umbrella also covers claims the underlying policies exclude, making its coverage broader as well as higher.

How does a commercial umbrella policy work?

A commercial umbrella sits on top of your underlying liability policies and is usually purchased in $1 million increments. The umbrella requires you to keep specific minimum limits on each underlying policy. If an underlying limit is lower than required, your business pays the gap between what you carried and what the umbrella required before the umbrella responds, so underlying limits must be coordinated at every renewal.

• General liability — premises, products and completed operations claims
• Commercial auto — accidents involving business vehicles
• Employers liability — lawsuits arising from employee injuries, under your workers’ compensation policy

What does a commercial umbrella pay in a real claim?

A commercial umbrella pays the portion of a covered claim above your underlying limit. If a $1,600,000 claim hits a $1,000,000 general liability policy, the general liability pays its $1,000,000 limit and the umbrella pays the remaining $600,000. Without the umbrella, your business would pay that $600,000 itself. Damage to your own property, or property in your care, custody or control, is still excluded.

An example of how it plays out for a sign installer:

1. Your crew installs a sign at a customer’s store. A few days later it falls off the building, crushing three cars and injuring six people inside them.
2. Three of the injured spend months in intensive care. Hospital bills and vehicle damage total $1,600,000.
3. Your general liability policy’s completed operations coverage pays its $1,000,000 limit.
4. Your commercial umbrella pays the remaining $600,000.
5. Replacing the sign itself is on your business, because property in your care, custody or control is excluded.

What is a self-insured retention on a commercial umbrella?

A self-insured retention (SIR) is the amount your business retains when the umbrella covers a claim that no underlying policy covers. It is shown next to the umbrella’s limits and is often $0, $10,000 or $25,000. When an underlying policy pays first, there is no SIR. When the umbrella drops down because the underlying policy excludes the claim, you pay the SIR and only the umbrella limit is available.

Claims sometimes excluded by underlying policies but covered by an umbrella can include libel, slander, mental injury and mental anguish. Coverage and exclusions vary from policy to policy, so we compare the umbrella and each underlying form to find and close gaps.

How much commercial umbrella coverage does a business need?

The right umbrella limit depends on the assets your business could lose in a lawsuit, how likely your operations are to injure the public or damage property, the vehicles you run, and the limits your contracts require. There is no standard number. Businesses with fleets, public foot traffic, completed-operations exposure or large contracts typically need higher limits than office-based firms.

We walk through your exposures and contract requirements with you and show how each limit option would respond to a realistic severe claim.