Business owners don't need another reason for a sleepless night, but here's a big one: in our experience, nearly 80% of businesses are not covered against potentially business-ending lawsuits and catastrophic losses. That's because they fail to add commercial excess and umbrella insurance to their coverage package. The reality is that when it comes to protecting businesses, umbrella coverage is a necessity, not an option.

Umbrella coverage provides that extra protection a business needs for big, unexpected events that can quickly exceed its primary insurance limits — from devastating multi-million dollar lawsuits to liability claims, employee auto accidents, and more. And coverage is surprisingly affordable. Just keep in mind that an umbrella is a supplemental policy, not a standalone policy. Liability is simply a factor of doing business. And every business that plans on remaining solvent and competitive should have an umbrella policy for proactive peace of mind. It offers extra protection needed in the event of a catastrophic loss or lawsuit, with limits that go well beyond standard general liability limits.

Five reasons why your business may need umbrella insurance

1. You could go bankrupt without it — especially if your business is in a litigation-prone industry. One large jury award could quickly put you out of business, if it exceeds your policy limits.
2. Your customers require it — if an accident occurs, they want to make sure your business has enough coverage to handle it.
3. Your business is inherently dangerous — you manufacture hazardous materials, or have a high risk of occupational injury to your employees.
4. You have company vehicles or employees who drive their personal cars for business — which brings liability on every mile traveled.
5. You have a physical presence — one slip, fall or other accident on company property is all it takes.

Make sure your business plans for that rainy day

Consult an independent insurance agent to learn more about tailoring a commercial umbrella policy for total business protection.

About the author
Chip Hamann serves as The Hanover's Small Commercial chief underwriting officer. In this role, he leads a team responsible for determining the underwriting strategy, state management, product and point of sale offerings. He also oversees the field underwriting teams. He and his team partner with actuarial, product, technology, corporate underwriting and marketing to continually assess and evolve The Hanover's underwriting strategy to help position The Hanover as a carrier of choice for agents in Small Commercial.

The recommendation(s), advice and contents of this material are provided for informational purposes only and do not purport to address every possible legal obligation, hazard, code violation, loss potential or exception to good practice. The Hanover Insurance Company and its affiliates and subsidiaries ("The Hanover") specifically disclaim any warranty or representation that acceptance of any recommendations or advice contained herein will make any premises, property or operation safe or in compliance with any law or regulation. Under no circumstances should this material or your acceptance of any recommendations or advice contained herein be construed as establishing the existence or availability of any insurance coverage with The Hanover. By providing this information to you, The Hanover does not assume (and specifically disclaims) any duty, undertaking or responsibility to you. The decision to accept or implement any recommendation(s) or advice contained in this material must be made by you.

LC 2018-046