Commercial Umbrella Insurance in Massachusetts

What is Business Umbrella Insurance?

Businesses in Massachusetts need to protect themselves from many potential risks. Most insurance policies, though, have an upper limit to how much protection they’ll provide. Businesses that want more coverage than their primary policies afford can obtain extra protection through commercial umbrella insurance (or business umbrella insurance).

Business umbrella insurance is a supplemental type of insurance that enhances the coverages of underlying policies. The underlying policies are called primary policies, and the umbrella policy is a secondary policy. Primary policies may be commercial auto insurance policies, general liability policies, or other kinds of commercial insurance policies.

As a secondary policy, an umbrella policy’s coverages usually don’t begin until an underlying policy’s coverages have been used up. For example, an umbrella policy might not begin providing coverage for an auto accident that an employee caused while driving in Boston, MA until the coverage limits of an underlying commercial auto policy have been reached.

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Commercial Umbrella Insurance Massachusetts

What is a Commercial Umbrella Policy Used For?

There are two common ways that businesses use a commercial umbrella policy. A policy can fill in coverage gaps left by primary policies, and it can add onto the coverage limits of underlying policies. In many cases, umbrella policies perform both functions, and they do so for multiple primary policies.

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What Massachusetts Businesses Can Benefit from Commercial Umbrella Insurance?

Commercial umbrella insurance has benefits for lots of Massachusetts businesses. A few particular businesses that may want a policy include the following:

  • Businesses that have lots of assets, as they may be targeted in lawsuits
  • Businesses in industries where lawsuits are common
  • Businesses that sell products or services that put them at high risk of being sued
  • Professionals (because legal expenses can exceed a professional’s general liability insurance limits)
  • Any business that wants more insurance coverage than their primary policies provide.

Commercial Umbrella Insurance Massachusetts

How is Excess Liability Insurance Different from Business Umbrella Insurance?

Excess liability insurance and business umbrella insurance are similar, and the terms are even used as synonyms by people outside the insurance industry. The two kinds of insurance are different, though. They both provide supplemental coverage, but the type of supplemental coverage they provide is different.

Excess liability insurance is typically written as a “follow form” policy, which means its coverages and exclusions are identical to the coverages and exclusions of the underlying policy. Because it has identical coverages and exclusions, excess liability can usually only be used to extend the limits of an underlying policy. It doesn’t normally fill in coverage gaps. Additionally, an excess liability policy will usually serve as a secondary policy for just one primary policy.

A commercial umbrella policy don’t have to follow the coverages and exclusions of the primary policies that they supplement. Business umbrella policies, therefore, can fill in coverage gaps by providing different or more robust coverages. They also can supplement multiple policies at once, since they don’t have to strictly follow any one policy.

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How Can Businesses Get a Business Umbrella Policy?

Although business umbrella policies don’t have to follow the coverages and exclusions of underlying policies, most umbrella policies require businesses to have primary policies in place that provide minimum amounts of coverage. For this reason, it’s important to make sure the necessary primary policies are in place when purchasing a business umbrella policy.

Businesses in Massachusetts can easily get quotes on commercial umbrella insurance and check their underlying policies by working with an independent commercial insurance agent. An independent agent is able to compare quotes from different insurers, and they have the expertise to review primary policy requirements and make sure the necessary underlying coverages are in place.

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