Just like an umbrella acts as a savior in heavy rains; similar is the concept and working of Umbrella Insurance. Umbrella insurance is a type of liability insurance that acts as an accessory or add-on over your basic insurance policies in order to provide an extra level of safety, protection, and coverage. It goes beyond the limits of your traditional insurance policy, providing you cover against property damage and other bodily, corporeal or material injury liability claims which are raised against your business. Business owners can even opt for more types of coverages including untrue arrest, legal charges, discrimination etc.
Working of Umbrella Insurance Policy.
In a legal lawsuit filed against your business, if you as the owner are found guilty and require paying a huge amount as damages to the other party; you can benefit from the umbrella insurance policy that you are holding. In another case, the umbrella insurance policy can also be utilized for paying charges incurred on fighting legal cases; even if, the final verdict is in your favor.
In the above-mentioned cases, the usefulness of umbrella insurance policy comes underplay once you have surpassed the limits and boundaries of your basic or traditional insurance policies or if the case is not covered by your basic insurance policies. In these scenarios, the required amount is paid by the insurance company up to the limits of your umbrella insurance coverage.
What if you don’t have Umbrella Insurance Policy for your Business?
Umbrella Insurance Policy is a weapon that you must have in your arsenal to protect your business’s valued assets and interests in the case of unthought-of or unimagined mishaps and accidents.
Your business’s assets must be spread across a wide variety of items like funds, investments, vehicles, properties and much more. In the event of a major claim made against your company and the court declaring you guilty, you are liable to pay huge sums as damages to the other party. If your basic insurance policy fails to cover the sum or doesn’t provide cover for the particular case then you need to pay from your own pocket. Hence, you are forced to look towards your business’s assets to cover the cost for you, thereby, displaying, exposing and exhibiting the assets that you own. Moreover, it can even hamper and deteriorate the performance and productivity of your business leading to further losses.
Hence, having the extra layer of safety and protection of umbrella insurance is pretty important for the productivity and profitability of your business. Umbrella insurance is an impressive, impelling, effective and hard-hitting way to protect the assets that you own under your business.
How much Umbrella Insurance I shall go for?
For calculating the umbrella insurance amount that you should go for the following 3 factors come in handy:
Percentage of risks faced by your business.
As an example, if you have a business of automobiles, think about the risk of one of your employees causing an accident while showing a vehicle to a prospective customer. Similarly, if you rent out residential apartments think about the construction activities that your company is participating in which could be a considerable threat to the protection of people living around your business’s premises. Higher the amount of risks that your business is facing; more amount you should invest in umbrella insurance policy.
Value of Assets.
This is a clear-cut way to determine the umbrella insurance policy’s amount that you should go for. As already mentioned above your business’s assets are always at a danger of getting exposed when you are unable to pay for the damages levied on your company through a lawsuit. Hence, the best option is to get umbrella insurance equivalent to the value of your assets.
A lawsuit or a claim, as already mentioned above, can not only expose your assets but also lead to hampering your business’s future productivity and profitability. Hence, the long-term impact of possible mishaps must always be considered before deciding the amount of umbrella insurance policy.
To keep your business moving forward in the way of growth and profitability providing it a cover of umbrella insurance policy is vital, critical and indispensable.