As a business owner, you know the importance of insurance coverage to protect your assets.
You have general liability, and you might even have an umbrella policy. However, the amounts of your coverage could significantly impact how your company recovers.are encouraged to have a minimum of $1 million in umbrella insurance, but this may not be enough for a small-business owner.
When your company lacks proper insurance coverage, you may be forced to pay the judgment from business assets and possibly future earnings. In this case, it is unlikely your company would survive the storm.
Why Umbrella Insurance is Necessary for Every Company
Even if you have general liability coverage, you may face a settlement or repair that exceeds your liability coverage limits. Without umbrella coverage, also known as excess liability insurance, you would have to pay the expenses out-of-pocket.
For a small premium, you can protect your company, employees and business assets. Your umbrella insurance policy adds a layer of protection along with the numerous other policies you could hold, such as employer’s liability, general liability and more.
Also, therecommends getting umbrella insurance, as most contracts will require a company to have general liability as well as umbrella insurance before doing work on their behalf.
Personal Injury Settlements Exceed Most Policy Limits
Forbes points out that 13 percent of personal injury liability lawsuits and settlements exceed $1 million. Also, this does not account for the lawyer’s fees that you would have on your end to defend your company, costs of repair inside your building, or having to shut down and miss sales opportunities during a lawsuit or investigation.
With a higher umbrella policy, you could cover these costs as well as the chance of a higher settlement.
also recommends having coverage that is equal to your small business net worth as a minimum. If you have limited coverage, you could be forced to liquidate your company to pay for the judgment, so having coverage that equates to your present value of income is also important.
Umbrella Insurance Coverage is Not as Expensive as You Think
Considering the protections and coverage that comes with umbrella insurance, the cost is more than reasonable.
An umbrella policy averages $150 to $300 per year for a $1 million limit, says the. The more you add to your policy, the higher the policy costs increase. For example, the next million you add to a $1 million policy will most likely cost about $75 per year in extra premiums, while each million after that is just $50 per year.
When deciding how much umbrella insurance your small business needs, consider your existing policy limits, and risks your business carries. Then, speak with anto have your business insurance needs assessed based on your net worth, company assets and potential liabilities.