Umbrella Business Insurance: Protection against Devastating Lawsuits


The United States is an extremely litigious nation where everyone can sue anybody for just about anything. Businesses are primary targets, with lawsuits (ranging from evident company errors to frivolous claims) reaching hundreds of billions of dollars a year. Either way, if a legal settlement or verdict exceeds your Michigan business’s liability coverage, your solvency would be at risk. For these reasons, it’s a wise move to get an umbrella business insurance policy which would provide added protection against disastrous losses arising from lawsuits.

Consider the following scenarios:

  • One of your employees driving a company vehicle gets involved in an accident that injures others.
  • A customer suffers from a slip-and-fall injury because your premises weren’t maintained properly.
  • A manager is accused of harassment by an employee.
  • You sold a faulty product that caused damage to a customer’s property.
  • A fire originating from your place of business destroyed neighboring facilities and properties.
  • Hackers infiltrated into your system, leading to a data breach lawsuit.

Out-of-court settlements, court awards, and legal costs can reach overwhelming amounts, far more than the limits of your existing general liability policy. An umbrella policy can help fill in both limit and coverage gaps. It serves three purposes:

1. It provides a safeguard against some claims not within your underlying policies, contingent on the assumption by the named insured of a self-insured retention (SIR);
2.It provides for excess limits when the limits of basic liability policies gets used up for payment of claims; and
3. It takes effect where the underlying policies leave off when the collective limit of such is exhausted by the payment of claims.

For instance, your company is sued for $1 million but your underlying policies can only cover $800,000. An umbrella policy can pay the remaining $200,000, leaving your company assets and income secure.

What to Expect

Insurance companies that underwrite umbrella policies require applicants to carry minimum primary limits. Of course, a good financial stability rating is expected, so when you’re looking for umbrella business insurance quotes, be ready to answer questions about your company (especially when these are about your assets and current contractual obligations). All this information will help your agent find the best policy for the price you can afford. To make sure you have the right policy limits, opt for an insurance company with an established reputation, like the MI-based Allied Insurance Managers.

An umbrella liability insurance policy provides invaluable add-on protection against the catastrophic consequences of a verdict. It’s a smart and highly beneficial option that works to protect the fruits of your hard work.


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Allied Insurance Managers's Bio

Headquartered in Rochester Hills, Mich., Allied Insurance Managers is one of the largest, privately-owned, independent insurance agencies in Michigan.