Small businesses usually do not have a considerable fund to fall back upon when things go wrong. That is why most firms opt for general liability insurance and employment practices liability insurance. However, what happens if your policy limit is insufficient to cover the loss incurred by your business? This is where umbrella insurance helps.
How Does Umbrella Insurance Work?
Umbrella insurance is used only after you have exhausted the limit of your liability policy. For example, if you are the owner of a transport business and a truck that you own is insured for$500,000. It meets with an accident and incurs a loss of $700,000.
Under typical situations, you will have to shell out $200,000 from your pocket while your auto insurance will take care of the rest. With umbrella insurance, this $200,000 will be taken care of, while your primary insurance contribution remains unaltered.
Cost of Umbrella Insurance for Small Businesses
The premium for umbrella insurance will depend on the type of business, the risk associated with it, and its size. This type of coverage usually comes in increments of $1million for firms to choose from. The average cost is around $80per month or $960 per year.
Before taking umbrella insurance, discuss with your service provider to understand what comes under its coverage. In some cases, the umbrella policy automatically comes into action when your initial plan has exhausted its limit. In other cases, you will have to file two separate claims for your primary and umbrella policies.
This is what you need to know about umbrella insurance. Do you have additional questions? Contact the experts at Promised Land Insurance Group. We are ready to assist you with all your coverage needs.