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Commercial Umbrella Insurance in Massachusetts

What Are Commercial Umbrella Insurance Policies?

Primary insurance policies can give businesses robust protections against many different risks, but most commercial policies have limits that determine the maximum amount of coverage they’ll provide. Sometimes, Massachusetts businesses need more protection than their primary policies offer. In these cases, businesses may want to purchase additional protection through a commercial umbrella insurance policy.

Commercial umbrella insurance policies are secondary, or supplemental, liability policies. 

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As a type of liability insurance, commercial umbrella policies protect businesses from covered incidents in which they’re either accused of being or found responsible for damage or injury that another party sustains. If an individual, business, or other organization suffers a loss because of a business’ actions (or inactions), a policy may help cover any legal costs and settlements associated with the incident.

Being a supplemental form of insurance, commercial umbrella policies generally won’t begin paying for legal fees or settlements until all applicable underlying coverages have been exhausted. For example, if an underlying policy provides $300,000 worth of coverage for an incident, a supplemental policy likely won’t start to cover costs associated with the incident until legal fees and settlements exceed $300,00.

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Is Business Umbrella Insurance the Same As Excess Liability Insurance?

Business umbrella insurance and excess liability insurance are both forms of supplemental liability insurance, but the protections they offer are different.

Business umbrella policies have their own terms and conditions, which define what incidents they cover. The incidents they provide coverage for don’t have to be exactly the same as those covered by underlying policies. Thus, business umbrella policies can be used to both fill in underlying policies’ coverage gaps and extend underlying policies’ limits. Business umbrella policies can also provide supplemental protections for multiple policies at the same time.

Most excess liability policies are “follow form” policies, which means they adopt the terms and conditions of the underlying primary policy. They can be used to increase the underlying policy’s limits, but they aren’t typically able to fill in coverage gaps. Additionally, they usually only increase the protections of a single underlying policy.

What Businesses in Massachusetts Should Consider Business Umbrella Insurance?

Many Massachusetts businesses may want to consider purchasing a business umbrella policy, as lots of businesses are exposed to significant risks and could benefit from extra protection. Some specific examples of businesses that this type of insurance can be good for include:

  • Most professionals, as few professionals could afford to defend themselves throughout a lengthy liability lawsuit
  • Companies that have sizeable assets, as they can be targets of opportunistic lawsuits
  • Businesses in high-risk industries, as they have a higher probability of being sued

Does Business Umbrella Insurance Cost a Lot?

As with any insurance policies, business umbrella policies’ premiums vary. A cafe in Westfield, MA is exposed to different risks than a manufacturer in Boston, MA, and the two businesses will, therefore, pay different rates for business umbrella policies.

Generally speaking, however, business umbrella insurance is highly affordable. Many businesses in Massachusetts are able to get millions of dollars worth of coverage for comparatively small premiums.

How Can Businesses Get Commercial Umbrella Insurance?

Businesses can find out how much commercial umbrella insurance would cost them by contacting an independent, commercial insurance agent. An independent agent can request quotes from multiple insurers in Massachusetts and show businesses exactly how much a policy would be for them.

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