Business Umbrella Insurance: Who Needs It, How to Get It
Business umbrella insurance adds a layer of protection to other policies to guard against catastrophic losses.
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Business umbrella insurance sits on top of other insurance policies. It can pay out if you have a loss that costs more than your other policies will pay. This can help protect you against catastrophic losses.
Consider a commercial umbrella policy if you have multiple business insurance policies and your business sees a lot of foot traffic — that increases your liability risk. It may also be required by a contract, investor or vendor. Here’s what these policies cover and how to get one.
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Best options for commercial umbrella insurance
If you already have business insurance, see if your existing provider sells umbrella insurance. Many companies offer discounts when you bundle policies.
Beyond that, here are our top choices for umbrella insurance. In general, NerdWallet’s editorial team chooses the best business insurance companies based on these factors:
- Relatively few complaints from policyholders to regulators.
- High financial strength ratings from credit rating agencies.
- Online quotes that let you estimate your costs quickly.
The following companies sell umbrella insurance via agents or online. They generally require you to have general liability insurance or a BOP before you can get an umbrella policy.
Chubb
Chubb is one of our top-rated insurance companies thanks to its financial strength and relatively low numbers of customer complaints. It sells an umbrella policy online — as long as you buy general liability insurance or a BOP at the same time. You can choose limits from $1 million to $5 million. If you buy online, you can pay all at once or in installments. Read our review.
The Hartford
The Hartford is another longstanding insurance company and, like Chubb, we give it high marks for financial strength and customer complaints. You’ll need a general liability or commercial auto policy before you can get a quote for umbrella coverage. I wasn’t able to get one online, although The Hartford’s website seems to indicate some business owners can. The company sells insurance through independent agents too. Read our review.
American Family Insurance
American Family offers multi-policy discounts to some customers who buy umbrella and other types of business insurance at once. I was only able to request an umbrella policy quote, not actually see one online. But independent agents sell American Family Insurance policies. The company also has strong financial strength and ratings and relatively few complaints. We haven’t reviewed American Family business insurance yet.
BiBERK
BiBERK is an online insurance subsidiary of Berkshire Hathaway. It sells umbrella insurance in more than half the U.S., including states like California, Texas and Florida. You can get a quote online if you already have another biBERK business insurance policy.
The company says its typical umbrella policy costs $200 to $400 per year. BiBERK saw many more complaints than we’d expect about its general liability insurance coverage between 2022 and 2024, though, so it’s not one of our top recommendations for liability insurance. Read our review.
What is business umbrella insurance?
Business umbrella insurance provides extra protection on top of your other liability insurance coverage.
It works on a "follow form" basis. You have to use up your underlying coverage before you can turn to your business umbrella coverage.
Let’s say a customer is injured in your store. The following happens:
- The customer sues you for $10 million.
- The court awards the customer $6 million.
- Your general liability policy has a $5 million limit.
Your general liability insurance policy should pay out up to its limit, $5 million. But then your business is on the hook for the remaining $1 million.
Without a business umbrella policy, you might have to borrow money, draw on your savings, or even resort to bankruptcy.
With a business umbrella policy, you can file a claim with your umbrella provider. It can pay out to cover the remaining $1 million.
Save up to 30% on business insurance
NerdWallet Small Business helps you get real-time quotes from 30+ insurers, and instant access to your Certificate of Insurance (COI) through our partner, Coverdash.
What does business umbrella insurance cover?
Business umbrella insurance covers what other insurance policies don’t. This includes:
- Claims beyond the limits of your underlying policies. Let’s say your business auto insurance policy covers $1 million in bodily injury, but someone successfully sues your business for $3 million. A business umbrella insurance policy can cover the $2 million difference.
- Claims beyond the aggregate limit of your underlying policies. If you have lots of small claims, you may not exceed your per-claim limit with any single one. But multiple claims can add up to more than your aggregate limit. Business umbrella insurance picks up after you max out the underlying policies.
- Claims the underlying policies don’t cover. For example, business general liability insurance likely covers equipment you own only. If you rent other equipment and that equipment is damaged, your business could be liable for those damages unless you have business umbrella coverage.
What does commercial umbrella insurance exclude?
Business umbrella insurance does not cover:
- Errors and omissions. Business umbrella insurance doesn’t cover losses from mistakes known as errors and omissions. Professionals who carry E&O insurance should also have a cash reserve to help cover any additional claims.
- Property insurance claims. If someone damages your business’s property, you will have to rely on property insurance or your savings to replace it. Umbrella insurance doesn’t cover damage to the property a business owns.
- Failure to have the right underlying policies in place. If you don’t have general liability insurance, you can’t rely on a business umbrella policy for coverage. Remember, business umbrella insurance provides additional coverage — not general coverage.
- Criminal activity. Business umbrella insurance won’t cover fines or lawsuits that result from you or others in your business breaking the law.
- Claims beyond the limits of the umbrella policy. Even umbrella policies can be exhausted. If claims exceed the limits of your umbrella policy, your business will have to foot the bill for the difference. High-risk businesses should build a strategic cash reserve for this.
Which businesses should get business umbrella insurance?
If any of the following applies to your business, consider an umbrella policy:
- You have commercial property open to the public. Inviting others onto your business’s property opens you up to risk. If someone is injured on your property, or if an employee acts inappropriately, the lawsuits that can follow could quickly exhaust a general liability policy.
- You or your employees work on other people’s property. Working on other people’s property means increased risk for your business. Even accidental property damage can result in expensive lawsuits.
- You have a contractual obligation to carry business umbrella insurance. This is most common with government contracts. Any customer can require you to carry business umbrella insurance, though. This protects both your business and the customer in the event of a lawsuit.
- Your business is at high risk for a lawsuit. Unfortunately, this describes most businesses. The only businesses not likely to need business umbrella insurance are home-based sole proprietorships with no employees, no subcontractors and no direct contact with clients. Even if this describes your business, weigh the risk of being named in a lawsuit before deciding to pass on this additional protection.
How much does business umbrella insurance cost?
Business umbrella insurance costs about $75 per month, according to Insureon, an online insurance marketplace. Policyholders pay about $40 for each $1 million in coverage.
As with any type of business insurance, rates will vary depending on your industry. High-risk industries like construction and manufacturing will have higher rates than low-risk industries like professional services.
How to get business umbrella insurance
Commercial umbrella insurance can only pay out after you exhaust your other insurance policies. For that reason, you’ll need general liability insurance or a BOP in place before you can get an umbrella policy. Here’s how to get business insurance for the first time.
When you’re ready to add an umbrella policy, follow these steps:
- Decide how much coverage you need. Most policy limits start at $1 million and go up from there. A contract or vendor may require certain limits. Or you can choose your own based on how much liability risk you think your business faces.
- Get a quote from your current insurer. You may get a small discount when you bundle policies. Filing claims can also be easier when you only have to deal with one company.
- Get other quotes for comparison. We always recommend getting several insurance quotes to make sure you get a competitive price.
- Buy your policy. You may need to work with an insurance agent to complete the purchase.
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On this page
- Best options for commercial umbrella insurance
- What is business umbrella insurance?
- What does business umbrella insurance cover?
- What does commercial umbrella insurance exclude?
- Which businesses should get business umbrella insurance?
- How much does business umbrella insurance cost?
- How to get business umbrella insurance
