Commercial General Liability - what’s the right limit?
This is a question we get asked quite often. As a business owner, of course, you’re going to want to make sure that you’re covered whatever situation may come your way. You, therefore, need to ask yourself if it’s worth spending extra money on your policy to increase your coverage.
Here are a few of the factors you may want to take into consideration as you explore liability coverage options for your business.
The Type of Industry in Which You’re Involved
The amount of commercial general liability coverage you invest in is going to depend largely on what type of industry you’re engaged in. For instance, if you’re an IT consultant or an accountant or perhaps you’re in sales of some sort, your liability needs are probably going to be significantly different than say someone who is in general contracting or industrial manufacturing. The more risk and the more exposure associated with your particular business and field, the more liability coverage you’re probably going to need.
The Likelihood of Lawsuits
Some businesses are unfortunately more prone to being involved in litigation than others. Again, looking at specific examples: A florist is generally in less danger of getting sued than a roofing company. And make no mistake about it, lawsuit fees and costs can add up very quickly. Covering legal expenses, claims that need to be paid out, and other associated expenditures have a tendency to rapidly escalate into the hundreds of thousands, if not more. Your liability coverage is set up to pay up to the policy amount. So if in fact, you are in an industry that is more prone to legal action, you might definitely want to consider going with higher limits of liability coverage.
The Umbrella Option
Commercial umbrella insurance acts as a safety net of sorts. Your liability coverage takes effect first; however, beyond this, if the amount you need to pay out exceeds the limits of your liability coverage, then the umbrella policy comes into play. So essentially it is another layer of protection for your business and it generally includes some additional coverages beyond that of a regular commercial general liability policy.
For instance, if a customer gets hurt on your property and as a result a lengthy and very expensive legal battle ensues, one in which you are ultimately ordered to pay for medical expenses, lost work wages, along with emotional distress costs, these totals can consequently add up to much more than what your general liability policy will cover. This is where the umbrella policy will cover the difference between what’s owed and what your liability coverage will satisfy. Therefore, if you do think you require more protection than what is involved with a standard liability policy, an umbrella option is certainly something you want to check out for extra coverage, higher limits and more economical premiums.Talk to your insurance broker and find out what products might be best for your business.