Commercial umbrella insurance for real estate businesses and rental properties

The costs of a lawsuit against your real estate business can quickly add up – even to the point where your insurance coverage isn’t enough to cover it. Commercial umbrella insurance, similar to excess liability insurance, can pay for claims that exceed the limit on your liability policy.

An umbrella insurance policy can boost the coverage limits of your:

• General liability insurance
• Commercial auto insurance (required in almost every state)
• Employer’s liability insurance (part of workers' compensation insurance)

Most real estate businesses purchase umbrella insurance to satisfy client contracts that require policy limits higher than $2 million.

Umbrella insurance activates when the limits are exhausted on the underlying policy.

For example, say your employee fails to use a wet floor sign after mopping the office floor. Your client slips and falls, suffering a serious head injury that leaves them unable to work for months. The client sues you for $2.5 million in damages.

If your real estate business has general liability insurance with a $2 million per-occurrence limit, that policy would cover the first $2 million. Then your umbrella policy would kick in as supplemental insurance and cover the remaining $500,000.

A commercial umbrella liability policy simply mirrors the coverage of the underlying policies, which may include:

Umbrella insurance/excess liability insurance provides coverage after you reach the limit of your general liability policy. It can help cover legal costs and medical bills related to:

• Customer bodily injuries, such as from a slip-and-fall accident
• Customer property damage
• Advertising injuries, such as slander and libel
• Copyright infringement

Umbrella coverage will also cover claims on the general liability portion of a business owner’s policy (BOP), which bundles general liability insurance with commercial property insurance at a discount.

The cost of a car accident involving multiple vehicles can go sky high if the other drivers sue for damages. Having car insurance is a must in order to protect yourself financially. 

Real estate umbrella insurance covers liability claims that exhaust the limits on your commercial auto policy. It also extends coverage on hired and non-owned auto insurance for real estate professionals who drive their own vehicles for work purposes.

If you or one of your employees gets into an auto accident, it can cover legal costs related to:

• Injuries caused to others
• Damage to another person’s vehicle
• Other third-party property damage

Being in real estate can involve physical work, which is why umbrella insurance is a recommended policy for professions like commercial landlords, property managers, and real estate agents. If one of your employees blames an injury on a lack of proper equipment or other negligence, they could sue.

When an employee lawsuit over an injury escalates and exceeds the limits on employer’s liability insurance (usually included in workers’ compensation insurance), a commercial umbrella policy kicks in to cover the remaining defense costs. It adds an extra layer of protection to your existing coverage.

• Professional liability lawsuits (for this, look to excess liability insurance)
• Property insurance claims
• Expenses covered by the underlying policy
• Employee discrimination lawsuits

In addition to commercial umbrella insurance and its underlying policies, real estate professionals and rental property owners should also consider:

Cyber insurance: This policy helps real estate businesses survive data breaches and cyberattacks. It can help cover client notification expenses and other associated costs.

Errors and omissions insurance (E&O): Also called professional liability insurance, this policy can cover legal costs of lawsuits related to a real estate professional's business decisions.

Lessor's risk only (LRO) insurance: This policy protects commercial landlords from tenant lawsuits over property damage and injuries.

Are you ready to safeguard your real estate business with commercial umbrella insurance? Complete Insureon’s easy online application to compare quotes from top U.S. insurers. Once you find a policy that fits your needs, you can begin coverage in less than 24 hours.