Umbrella Business Insurance

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All of us are comfortable with the idea that having standard insurance policies is enough to get them through a tough day. However, what they do not know is that these policies do not offer them enough protection from situations that can make them incur heavy losses especially in lawsuits.

When you think your existing insurance policies are enough, think again. It is plainly not enough to cover all of your actual expenses in case something bad happens to the company.

This is especially true when it comes to liabilities arising from legal actions against you, or actions initiated by you. That’s where you need an umbrella liability insurance policy.

What is umbrella liability insurance? Simply put, it is a type of insurance that is used when everything else has been exhausted. “Everything else” includes your existing insurance policies because they have a limit as to how much you can expect to be compensated for. This is especially important for small businesses; any loss beyond what can be compensated for by existing policies may prove to be crippling to the company.

Here is one good example of where umbrella liability insurance comes into play. Let’s say you are running a small restaurant and one of your customers complain that one of your employees has accidentally spilled water on his cell phone and damaged it. As an employer, you are held liable for the actions of your people and is required to pay compensations to the customer for the damage to his mobile phone. However, you’d still go to court and defend yourself. You spend a lot of money, much more than what you are covered for in your insurance policies, and at the end you are judged guilty. By this time, you are already at a loss because of your expenses and this will cause you further trouble as you have to pay damages as well.

If you don’t have umbrella insurance, then clearly you will be losing a lot of money just because of a damaged cellular phone. This is a situation you won’t want your business to be in; if you have umbrella insurance, the money you spend for the case in excess of your existing liability insurance policies will be covered. You can call it extra ammunition, to make sure you are really covered and protected from possible losses due to lawsuits and other damaging situations.

Umbrella insurance policies are designed to be able to compensate for at most US$5 million. Now, don’t think that just because they can cover an amount that big, then they are expensive. Actually, umbrella insurance policies are very inexpensive. Furthermore, it is an investment just like your standard insurance policies are. It is a measure that you can take to make sure you don’t lose anything even when you lose in a lawsuit.

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