As a business owner, you dutifully buckle your liability insurance seatbelt every year.
But what happens when an accident exceeds that primary protection?
A multi-million-dollar lawsuit that exceeds a company’s liability insurance limits could be devastating, especially for a small business.
Without a supplemental restraint, your financial assets could crash hard.
Commercial excess liability insurance is one of the ways a business can help protect themselves from these potentially large, catastrophic losses.
What is Commercial Excess Liability Insurance?
Commercial excess liability insurance kicks in when a claim goes beyond your standard liability policy limits.
It provides higher limits, with the same terms and conditions as the underlying policy. It is an extra layer of security to safeguard you from a disastrous event.
Here’s an example:
Say your business has a $1 million general liability insurance policy. A claim is filed, and your business is found liable for $1.5 million in damages.
Your excess liability policy kicks in to cover the additional $500K over your primary limit.
Without that extra coverage, you’d be paying a huge chunk of that claim out of pocket.
Not an ideal situation.
What Is Covered by Commercial Excess Liability Insurance?
Commercial excess liability insurance simply extends the limits of an underlying business liability insurance policy, up to the amount purchased.
It does not change the coverage of the existing liability insurance.
Excess liability policies can provide an extra cushion of protection on top of an existing policy for large or potentially catastrophic claims.
It helps protect the future of a business by ensuring it is not bankrupted by a single event or claim.
Who needs Commercial Excess Liability Insurance?
As a business grows, so do its liability risks. The risks increase with the amount of work and the facilities or potentially dangerous equipment involved. It is beneficial for businesses that may have a lot to lose in the event of a claim or lawsuit.
You may want to consider excess liability policies if:
- Your business has a lot of assets or property or works in a high-risk industry, excess liability coverage may be valuable.
- You have inadequate limits on your current policy to appropriately cover the company’s risk exposure.
- Your business is taking on a project for a client and the contract requires liability insurance limits that exceed the company’s primary liability policy.
No matter how much you invest in safety and prevention, accidents can always happen. The future is unpredictable. Risks will always exist, but you can protect your business by being prepared with insurance that covers potentially catastrophic events.
Commercial excess insurance is a risk management strategy that can help you protect your company, its assets, employees, and clients.
Commercial Excess Liability Insurance Benefits
If your business wants added protection, above the limits of your business liability policies, commercial excess liability insurance can provide that security. If you work in a high-risk industry or own significant assets, commercial excess liability insurance coverage can give you and your clients confidence that your business can survive a major incident or accident.
What does Commercial Excess Liability Insurance cost?
Since there are already underlying liability coverages, commercial excess insurance can be surprisingly affordable – especially for the additional protection it provides
The exact cost will vary depending upon:
- The size and type of business you have.
- Your existing business liability insurance.
- Your potential exposure.
For example, a construction company’s liabilities may be significantly more than that of a retail business.
However, for a relatively small additional cost, an excess liability policy offers peace of mind that the business is protected – and the cost for each additional million dollars in coverage usually decreases.
How Much Excess Insurance Coverage Does My Business Need?
There are several factors you should consider when determining how much commercial excess liability insurance your business needs:
How much does your business liability insurance cover?
If there is the potential for a lawsuit to exceed your liability policy limits, you should think about excess insurance that will increase your limits.
Consider the risks involved with your business and the industry. If you work with hazardous materials or your employees operate vehicles or heavy equipment, your business may need higher commercial excess insurance limits.
How much does the business have in assets?
In general, the more assets a business has, the more coverage is needed to protect it and its finances.
A good rule is to have at least enough insurance coverage to replace your company’s assets. Otherwise, a large lawsuit could wipe out those assets.
Do you plan to grow the business?
If a large lawsuit exceeds the company’s assets and coverage, it could go bankrupt. It will certainly threaten the company’s ability to reinvest in its own growth. ‘
When considering a commercial excess policy, consider your growth plans.
Depending upon the size of the company and its risks, businesses usually carry excess liability insurance coverage of at least $1 million, and as much as $25 million or more. It is a relatively low-cost addition to business insurance to safeguard a company’s assets and protect against large claims.
Don’t Gamble with Inadequate Coverage
You’ve invested everything into building your company. But one massive lawsuit could destroy it all in an instant.
Don’t roll the dice and hope that never happens.
Protect your enterprise now with excess liability insurance tailored to your risks.
At NIP Group, we get it – insurance can be complicated. But coverage shouldn’t be confusing.
Our agents break down the complex into smart policies so you can make smart choices. We’ll assess your unique risks and craft tailored solutions to fully protect your business.
Don’t lose sleep worrying if you have adequate liability protection.
Let us handle that so you can rest easy and focus on what matters – managing a thriving company. Lean on our experience to safeguard your hard work. We’re in your corner, making sure you have the right coverage to weather any storm.
Contact us today for a complimentary consultation. We’ll review your current policies and exposures. You’ll walk away understanding exactly where you stand – and have confidence your assets are shielded.
