What is a Business Umbrella and why do I need one?

Posted on April 5, 2020

In last month’s blog, we defined a Personal Umbrella Policy and its value.  In this month’s blog, we are going to cover a Business Umbrella Policy and how it protects you AND your business.

What Is a Business Umbrella Policy?

As with a Personal Umbrella Policy, a Business Umbrella Policy provides additional liability insurance coverage above your other policies.  A business umbrella policy provides coverage in addition to your businessowners, general liability, business auto, workers’ compensation, and employee benefits policies.

Why Do I Need One?

Safety and prevention are great ways to protect your business, but accidents happen and you can be sued and found liable even when you may not have been able to prevent the injury.  All insurance policies have caps on how much liability protection you can obtain.  For example, most businessowners’ policies have a $1,000,000 per occurrence limit.

An umbrella policy would position your protection above the limits on your other liability insurance policies to be able to respond to larger claims made against you.


Call us today at 781.444.3050 to discuss or please keep reading to learn more.


What Can I Lose?

In the event you are found liable in a covered loss, the amount of coverage on your policy does not limit how much you will owe.  Fortunately, in many cases, the liability limit is enough to cover the amount.  However, when the amount of your coverage on the policy is lower than the claim awarded by a jury, you would still responsible for the difference.  Your business is now at risk!

A large loss could eliminate your profits.  It could force you to sell off assets or curtail spending (including having to terminate employees) to free up cash to make settlement payments.  It can force you to close your business or file for bankruptcy.

Although your personal assets would not be at risk, any of the above would seriously affect your income and lifestyle.

How Can I Calculate How Much Liability Coverage I Need?

There is not really a simple solution or one-size-fits-all answer to this question.  Every business and industry is different.  Some have more risks while others have a low risk.

However, as we discussed, your current and future assets and income are at risk so a quick calculation is a good place to start to understand your potential exposure.  Fill in the column to the right under “Value” based on the items “At Risk”.  Total those up and you can compare it against your current liability coverage.

At Risk Value
Business Assets $
Business Liabilities $
Annual Profits $
Savings/Checking $
Future Business Income $
Total Assets:  Assets at risk $


Umbrella Insurance in Massachusetts

While we can never know what we are going to face tomorrow, you can protect your business financially with a Business Umbrella Insurance policy.  These high protection and low cost policies are built to protect you, your family, and your business assets against the worst case scenario.  Any Risk Management Strategy should contain an umbrella policy.

If you are a client, call your account manager today to review your policy.  If you are not a client, call us today to get a detailed review of your current policy and learn about your options and benefits of working with your local independent agency, Aronson Insurance.

We’ve partnered with local residents for over 100 years, and we’re honored to continue serving Massachusetts residents with flexible and personalized policies. To get professional advice on any of your insurance questions and concerns or to schedule a consultation and find the right coverage for you, call us today at 781.444.3050.

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