While it is good to have a general insurance policy for an individual or a family, it is essential for a business.

So let’s start with the basics. What is umbrella insurance? An umbrella insurance policy covers a business, up to the coverage value of the policy above the maximum limits for each of the covered risks; in addition, it covers some other risks for which there is no specific coverage, either through a rider in one of the insurance policies or a separate insurance policy.

Risks that are covered beyond the insurance policies or additional clauses that most companies have. Again, these are risks you probably already have insurance for.

Personal injury, for example, a visitor slips and falls in your lobby.

Damage to personal property, for example, collision of one vehicle with another, when one of the vehicles is yours.

Real estate coverage: damage to the building, rental unit, etc.

Malpractice or professional negligence: Companies do not always have coverage, except in cases where there is a history of litigation, for example, medical malpractice.

Additional risks covered (companies generally do not insure against these risks): litigation resulting from slander, mental disorder or anguish, emotional injury, slander.

You should remember that in any claim, the general insurer will first want to get paid under your primary insurance policy; Theirs will be activated when you have reached the limit of your main insurance. So in the end, Umbrella insurance is protection insurance against catastrophic risks that could shut down your business or cost you huge sums in litigation.

In fact, umbrella insurance is and should be part of your business protection suite, just like you have credit card insurance or fraud insurance. Unfortunately, ours is a litigious society. There are hundreds of attorneys whose core competency is advising victims, real or imagined, to sue, or at least threaten to sue, to get the best “offer” they can get.

I do not mean to suggest that litigation for injuries, emotional disturbances, etc. it is always, or even mostly, appalling.

So how should you determine what you need? Some advices:

• talk to your insurance agent. He or she is a professional who is versatile in not only assessing business needs but also sharing experiences.
• Depending on the size of your business and the industry you’re in, you’ll want to be with the largest company rather than the smallest. Larger insurance companies have more resources in case they need to negotiate a settlement, they also have access to excellent attorneys. The extra money you pay for your “brand” is often worth it.
• Talk to your friendly competitor, or even key vendors. They can share their experience with you and provide you with a good solid market.
• Make sure your primary insurance package is good. Not only should it cover common risks, but the coverage should be sufficient. Don’t under-insure to save a few bucks.

good luck