Commercial umbrella insurance cost

Small businesses pay an average of $86 per month for commercial umbrella insurance. Annual premiums range from under $400 to over $7,000 per year.

Our figures are calculated using the median cost of policies sold by leading insurance companies to Insureon's small business customers. The median offers a better estimate of what your business is likely to pay because it excludes outlier high and low premiums.

Commercial umbrella insurance activates when you reach the maximum policy limit on your general liability insurance, commercial auto insurance, or employer's liability insurance. The cost depends on the amount of coverage you buy, along with business size, revenue, and other factors that affect the cost of your underlying policies.

Most small business owners purchase this extra coverage as a way to meet a client's demands for limits exceeding $2 million.

The average cost of commercial umbrella insurance is $86 per month for Insureon's small business customers.

Annual premiums range from under $400 to over $7,000 per year. Among our customers, 29% pay less than $50 per month for umbrella insurance, and another 32% pay between $50 and $100 per month.

The cost varies for small businesses depending on their risks and the amount of coverage they choose.

Several factors will determine your umbrella insurance costs, including:

• Policy limits
• Claims history
• Industry risks
• Care of client property
• Location
• Types of coverage
• Business size and revenue

The cost of umbrella insurance increases with the amount of coverage you buy. In short, you'll pay more for higher policy limits.

Generally, it costs about $40 per month for each $1 million of additional coverage you purchase. For example, raising the limits on a general liability policy from $2 million to $5 million might cost an additional $120 per month over the cost of the underlying policy.

Commercial umbrella insurance boosts your limits across several liability policies. If you only need coverage added to one policy, then you could purchase excess liability insurance, which acts similarly.

In addition to contractual requirements, you'll want to consider how much a lawsuit could potentially cost your business when deciding how much coverage you need.

Underwriters often see previous insurance claims as an indicator of future risk, and will adjust rates accordingly.

If you've filed a claim in the past, it could increase the cost of umbrella insurance. The fewer liability claims you have on your record, the lower your insurance premiums will be.

For umbrella insurance, a claim on any of the underlying policies, such as general liability coverage, can cause your rate to increase.

For most small businesses, your industry has the biggest impact on your umbrella insurance premium.

Businesses in industries that are vulnerable to costly lawsuits often need higher limits, and will pay a higher premium for umbrella insurance. Contractual requirements for higher liability limits are also more common in certain industries.

For example, manufacturers face a high risk of multi-party injury lawsuits and pay an average of $102 monthly for umbrella insurance, while nonprofits pay an average of only $43 per month. The graph below illustrates how the type of business affects what you'll pay for a commercial umbrella insurance policy.

Depending on the industry that you work in, such as construction or cannabis, you may be required by your state to carry general liability insurance. For other businesses, such as those in real estate, insurance, or healthcare, you may need professional liability insurance (also called errors and omissions insurance) before you can get a license.

If you regularly handle property that belongs to your customers or clients, it drives up your risk of a property damage lawsuit. Your insurance rates will go up to reflect the increased risk of you or an employee breaking or misplacing someone else's property.

Keep in mind, you'll need bailee insurance to cover customer items in your care, custody, or control, which are otherwise excluded.

For example, a computer repair business might pay a high rate for a business umbrella policy due to the risk of handling laptops and hardware that belong to customers.

The cost of your umbrella policy will depend, in part, on what policies are being expanded.

For example, a company that only carries an auto insurance policy will likely pay less for umbrella coverage than a business with general liability, commercial auto, and employer's liability insurance.

The bigger your business and the more revenue you generate, the more you will likely pay for commercial umbrella insurance coverage.

This is, in large part, because the more work you perform for clients, the more opportunities there are for errors, accidents, and other incidents.

Single-person businesses, such as sole proprietorships or limited liability companies (LLCs), will likely see lower premiums than small businesses that have employees due to lower risks.

A solo general contractor, for example, will have different business needs and insurance rates than a large commercial building company.

Commercial umbrella insurance increases the coverage limits of your underlying insurance policies in $1 million increments. This coverage will then kick in when your underlying policy reaches its limit, which could save your business from a devastating loss.

While it's important to have umbrella liability insurance to make sure you're fully protected against the high costs of a lawsuit, there are a number of other reasons why small businesses would need to invest in this coverage.

This includes:

Small businesses often need umbrella insurance to comply with contracts that require higher-than-average limits and to protect against the most expensive kinds of claims, such as an auto accident involving multiple vehicles.

It's fairly common for a client's contract to call for a $5 million limit on a policy. In that case, an umbrella policy with a limit of $3 million would be added to a business liability policy with a $2 million limit to reach the total requested amount.

At any business, a visitor could trip and suffer a bodily injury. The resulting legal fees and medical expenses might escalate to the point where they could sink your business.

When someone sues your business—even if it's a frivolous lawsuit—you'll have to pay legal defense costs, such as the cost of hiring an attorney. If you lose the suit, you could end up paying a fortune in a court-ordered judgment or a settlement.

Even if no one outside your company visits your office, someone could still hold your business liable for damages.

For example, businesses that run advertising campaigns or post on social media could face a lawsuit if they post content that doesn't belong to them, or make a false claim about a competitor.

Umbrella insurance premiums are based upon your level of risk and how much coverage you buy, so small businesses often pay only a small monthly premium for this coverage.

However, there are still several ways to help keep umbrella insurance costs down and avoid more expensive rates, including:

Shop around. Different insurance companies offer different rates and coverage. You could contact them individually, or complete Insureon's easy online application to get quotes from trusted providers in one place.

Pay your entire premium upfront. You can typically pay your premium in monthly or annual installments. It might be tempting to go with a smaller monthly payment, but most insurers offer a discount when you pay the full annual premium instead.

Proactively manage your risks. Umbrella insurance covers your liability risks across several policies, and fewer claims mean lower insurance rates.

For example, if a client at a real estate business falls in the office and suffers a major injury that goes beyond the standard policy, umbrella insurance would kick in and provide additional financial coverage. However, subsequent insurance policies purchased by the real estate agency may be higher due to the claim.

Business owners can create a comprehensive risk management plan to avoid claims. For example, you might:

• Develop a thorough training program for employees
• Invest in a security system
• Compile rules for posting to social media
• Create procedural checklists and reviews
• Minimize hazards on your business premises
• Limit who can drive company vehicles

You can find ways to save money on every type of insurance, from general liability insurance to commercial auto insurance.

You can only buy umbrella insurance to boost your general liability, commercial auto, or employer’s liability insurance policies. You must first buy one or more of these policies before you can buy umbrella coverage.

Umbrella insurance has many of the same exclusions as the underlying coverages, such as an exclusion for intentional and criminal acts. Some umbrella policies may offer extra protection or drop down to cover gaps.

Small business owners choose Insureon as an easy, affordable way to find the right insurance protection for their unique needs. By completing our easy online application today, you can get free quotes for umbrella insurance, general liability, and other policies from top-rated U.S. insurance companies.

Our licensed insurance agents can answer your questions about liability protection and endorsements, and help you purchase cost-saving packages like a business owner's policy (BOP). Most small business owners can begin coverage and receive a certificate of insurance (COI) within 24 hours for peace of mind and proof of coverage.