Commercial Umbrella Insurance in NYC
Whether consultant, retailer or cupcake baker, as a business owner in New York City you’ve probably thought about your chances of being sued in today’s slip-and-fall suit-happy world. On the other hand, you don’t want to be a worrywart who pays for too much insurance. So when does protecting your small business with an umbrella policy make sense? Let us walk you through it.
What is Commercial Umbrella Insurance?
It’s a form of liability insurance that can offer extra coverage beyond your general liability, EPLI, or commercial auto insurance. So if you’re sued for damages that exceed those coverage limits, an umbrella policy can help pay what you owe. These can include claims for bodily injury, medical expenses and damage to property caused to others by you or your employees.
Think of it as a super safety net – those other policies are your first line of defense, this policy picks up when your business’s lawsuit disaster hits. For example: a customer claims he injured himself on your property and it turns into a drawn-out legal battle in which you owe $1.5 million in legal fees and damage awards. The typical business liability policy will pick up the first $1 million, but nothing more. That’s where the umbrella policy comes in handy.
Note: Umbrella policies do not supplement the coverage of Professional Liability Insurance, the policy for people who make their living off their expertise such as doctor, lawyer, engineer, etc. (If you’re concerned your professional liability limits don’t provide enough protection, ask us!)
Four out of 10 small businesses are likely to experience a property or general liability claim in the next 10 years
Who needs Commercial Umbrella Insurance?
It’s not a required coverage, but it can be invaluable even to small businesses. Many people think only big businesses require it, but the truth is, anyone can be sued for anything. That applies across industries, from contractors to restaurants to tee-shirt shops. And thanks to New York’s “Scaffold Law”, construction is a highly litigious arena where umbrella policies make sense thanks to unpredictable verdict amounts and large settlement values.
And if you lose in court, you could be on the hook for millions. Consider umbrella coverage if your business:
- has lots of contact with the public. More foot traffic = greater liability risks.
- wants to sign a big client who requires it.
- is on a tight budget. Sometimes an umbrella policy can cost less than increasing the limits of your general liability policy.
- serves high net worth clients.
- has employees who use their own cars to go to meetings or run business errands.
- puts your employees at high risk of injury on the job.
But most especially, consider it if you don’t want to have to dip into your personal savings in the event of a catastrophic lawsuit. You’ve worked hard to build your business and your lifestyle, don’t let a lawsuit (frivolous or otherwise) take it all away.
For example, say you’re catering a client party for a wealthy businesswoman. She comes to your office to finalize menu but trips over a stack of warming trays you left on the floor. She’s injured so badly she can’t work for a couple of weeks and she sues you for lost income. The killer is, her lost income is nearly a million! With added attorney fees and court costs, your general liability limits are maxed out. Umbrella insurance would cover you for the rest.
36%-53% of small businesses are involved in at least one litigation in any given year.
How does Commercial Umbrella Insurance help my business?
- Protects you from catastrophic claims that could put you out of business
- Helps you land big contracts.
- Helps you spend insurance dollars wisely.
- Offers broader coverage against some claims not covered by underlying policies.
Let’s look at another example. You’re a fledgling cupcake shop and you want to go after an RFP to provide tasty treats for VIPs at a special boxing event at Madison Square Garden. But, they require you to have $5 million in liability coverage. Your BOP only has $1 million in coverage. An umbrella policy can be a cost-effective way to boost your coverage and help you land the contract. Then your triple chocolate frosting knocks ‘em dead and everyone is clamoring for your business. Career made.
Small businesses pay $20 million out of their own pockets per year in tort liability costs.
What does Umbrella insurance cover? And what does it exclude?
Keep in mind that obtaining an umbrella policy will require you to have underlying primary coverage which is usually a primary General Liability Policy
Umbrella Insurance can increase coverage for:
- Slip-and-fall injuries.
- Car accident liability.
- Lawsuits over third-party property damage.
- Non-professional negligent acts
- Advertising Injury
- Libel or slander
Commercial Umbrella Insurance typically cannot cover…
- Malpractice lawsuits.
- Professional liability lawsuits.
- Employee discrimination lawsuits.
- Property damage.
- Illegal acts.
The amount of coverage you need and its cost will depend on your business’ unique characteristics, such as your industry, your size, whether you’re open to the public, and the type of projects you work on.
A Holland America cruise passenger was injured while walking through an automatic sliding glass door onboard and he now suffers seizures and memory loss. He was awarded $21.5 million in damages.
What are some common Commercial Umbrella Insurance claims?
Here are just a few examples of situations in which your business could be responsible for paying various costs, such as medical and legal expenses, as well as compensatory and punitive damages:
- While visiting your business, a customer trips on loose flooring and is injured.
- An employee in your painting or construction business accidentally leaves water running, causing substantial damage to a customer’s home.
- A class action lawsuit is filed against your business, alleging advertisements constituted misleading information.
- Your company mascot, a loyal German Shepherd, bites and injuries a customer.
- You cause an auto accident while driving the company van. You cause injuries costing $500,000, but your commercial auto limit is $300,000. Umbrella picks up the slack.
From the land of giant liability awards: the courts decreed Dominick’s owed Michael Jordan $8.9 million for advertising injury after they used his name in an ad without permission.
What other coverages might I need?
- Property – no matter if you rent, lease or own your own building
- General Liability – for claims of injury or damage to property caused by you or your employees.
- Professional liability (E&O) – If you offer professional services or regularly give advice to clients.
- Workers’ comp – if you have employees
- Auto policy – if you have company cars or use your own car for business
Why should I choose HCP?
We’re entrepreneurs too and we’ll protect your interests as if they were our own. Honig Conte Porrino
has worked with New York City businesses of all types and we understand the liability challenges you
must avoid to succeed. (We should, HCP has been doing this for more than 100 years!) Whether
you’re a retailer or restauranteur, HCP has the expertise to help you every step of the way.
We’ll pair you with an agent who specializes in your business and can coach you on how to protect
against all the risks you face, not just the ones you ask about. In addition, many of our employees have worked with us 15, even 25 years, and make their career here. You get to work with the same person year in, year out. No need to initiate someone new to how your company works.
35 percent of all general liability claims result in a lawsuit. Is your general limit enough?