Umbrella Insurance

An electrical contractor in San Diego had a journeyman cause a fire at a commercial building last year. Faulty wiring in a tenant space. The fire spread to three adjacent units before firefighters contained it. Property damage, business interruption claims from displaced tenants, and injury claims from people evacuating. Total claims exceeded $3.2 million. His general liability policy had $1 million per occurrence limits. His umbrella policy covered the remaining $2.2 million. Without it, he would have lost the business and faced personal bankruptcy.

Commercial umbrella insurance provides additional liability protection above your primary policies. When a claim exhausts your general liability, commercial auto, or employers liability limits, the umbrella policy pays the excess. It sits over your underlying coverage and responds when those limits are gone.

Construction creates catastrophic loss potential. A scaffolding collapse injuring multiple workers. A crane accident damaging adjacent buildings. A vehicle accident with serious injuries to multiple people. These events can easily generate claims exceeding $1 million. Your primary policies, even with standard limits, may not be enough.

Umbrella coverage costs surprisingly little for the protection it provides. A $1 million umbrella might add $600 to $1,500 annually to your insurance program. Doubling that to $2 million typically costs only a few hundred more. For contractors, this coverage provides essential protection against the catastrophic event that could end your business.

Commercial clients increasingly require umbrella coverage. Project owners on larger jobs want to see $5 million or more in total limits. Meeting these requirements through umbrella coverage costs far less than trying to purchase higher primary policy limits.