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Learn commercial umbrella insurance coverage basics like: What is covered? What isn’t covered? How much does it cost? Commercial liability umbrella’s main purpose is to give your business excess protection from lawsuits that exceed your underlying liability policy limits.

Commercial Umbrella Insurance Coverage Basics

As a business owner, liability insurance is an absolute must. It provides coverage for you, your employees, and your business for claims related to third party injuries or property damage. But what happens when a claim exceeds the limit of your commercial liability insurance policy? You would be responsible for covering the damages beyond your policy limits, which could be financially devastating.

There is a way that you can safeguard yourself from having to pay costs that exceed your liability policy. How? – With commercial umbrella insurance. Here we will discuss commercial umbrella insurance coverage basics – from costs to coverage to exclusions and more.

Commercial Umbrella Insurance Explained

A commercial umbrella policy offers coverage for any costs that exceed the limits of your commercial liability coverage. It complements your liability policy in that it takes over when the limits of your policy have been reached.

For instance, if you a customer suffers an injury on the property of your place of business, sues you for $2 million, and you are found liable for the injuries, but your liability policy only offers $1 million in coverage, a commercial umbrella policy could help to cover the remaining $2,000,000 that your liability policy won’t cover (depending on the limits of your umbrella policy).

Commercial umbrella insurance coverage basics. In other words, a commercial umbrella policy provides added security for your business and could prevent you from having to pay costly expenses in the event that you are found liable for claims that exceed your underlying liability coverages. So it picks up where your business auto liability, general liability and/or other liability policy coverage stops and providing higher limits for claims of bodily injury or property damage.

What Does Commercial Umbrella Liability Cover?

The coverage offered by a commercial umbrella insurance policy will vary from provider to provider. However, generally, this type of insurance provides coverage for costs that are associated with legal claims that exceed the limits of your primary commercial liability policy. Examples of incidents that a commercial umbrella policy will cover include:
  • A client trips over an extension cord left out on the floor in your place of business, sustains an injury, and the medical costs for that injury are more than the limits of your commercial general liability policy.
  • An employee damages a customer’s property while performing a service and the damages are valued at more than the amount that your commercial general liability policy will cover.
  • An error in advertising leads to a serious lawsuit and the fees associated with that law suit far exceed the limits of your primary liability coverage.

What Isn't Covered by Commercial Umbrella Insurance

A commercial umbrella policy won’t cover everything. For instance, this type of coverage can’t be applied to any claims that are associated with property insurance or expenses that are covered by your underlying commercial liability policy.

Commercial umbrella insurance coverage basics – it’s important to understand that a commercial umbrella policy isn’t a policy on its own. In other words, you need to have an existing liability policy in order to use this type of insurance. For example, if you don’t have a general liability insurance policy, a commercial umbrella policy can’t be applied toward a general liability claim.

The Commercial Liability Umbrella Coverage Form (CU 00 01 04 13), excludes certain coverages. Following are a few of the exclusions provided in the ISO form:

  • Aircraft or watercraft, and racing activities
  • Electronic data
  • Liquor liability
  • Pollution
  • Recall of products, work or impaired property
  • Workers compensation, employers liability, and employment-related practices

How Much Does Commercial Umbrella Insurance Cost?

The cost for this type of coverage will vary from business to business, and from provider to provider. There are a number of factors that will affect the cost of a commercial umbrella policy, such as the risks associated with your business, the limits of your existing general liability policy, and the amount of coverage you need.

To find out how much this type of policy will cost, speak to a reputable insurance agent who specializes in commercial umbrella liability insurance.

Is Commercial Umbrella Insurance A Good Investment?

We live in a very litigious society. Given the risks that are associated with running a business, there is always a chance that your business could end up facing a lawsuit. In the event that you are sued and found liable for the damages that are made in the claim, you are responsible for paying those damages.

While your commercial general liability policy will assist with covering the costs of any claims that you are found responsible for, it only offers so much coverage. Once you reach the limits of your policy, you are responsible for paying any remaining money that extends beyond your policy limits. This type of situation could be financially devastating for you and your business, and could potentially end up shuttering your company.

For this reason, having a commercial umbrella insurance policy is so important. Since this type of policy will cover costs that extend beyond the limits of your liability policy, it can help to shield you from serious financial hardship.

Commercial Umbrella Insurance Coverage Basics - The Bottom Line

We hope this article on commercial umbrella insurance coverage basics has been informative. Commercial umbrella insurance isn’t just for big businesses; companies of all sizes can benefit from this type of policy. Carrying this type of policy is a great way to safeguard you from the financial issues that could arise in the event that you are held liable for claims that extend beyond the limits of your liability insurance. In short, carrying a commercial umbrella policy is a wise investment for your business.

Understanding The ISO Commercial Liability Umbrella Coverage Form

Accidents are unpredictable. Some accidents are very small. Others trigger catastrophic events in the lives of the injured parties. Are your policy limits sufficient to protect you if a person you injure must have multiple lifesaving surgeries or requires 24-hour care for the rest of her life? If not, your business capital could be required to make up the difference.

The commercial liability umbrella coverage form can provide the limits you hope you never have to use but that could save your business from bankruptcy.
Consult the policy for definitions and limitations. The information below does not represent contract terms. The policy is subject to company underwriting practices.

What Is Covered

Commercial liability umbrella coverage begins when your other coverage ends. Umbrella protection applies over the limits of any other coverage forms. The most common underlying coverages are:

  • Commercial General Liability
  • Automobile Liability
  • Employers Liability
Other underlying liability coverage may also be listed, subject to insurance company underwriting guidelines. Keep in mind that the umbrella does not respond to a coverage unless the underlying coverage form also covers it.

What Isn't Covered

Every insurance coverage form or policy has limitations and exclusions. This is because only certain kinds of businesses need the coverage or the risk or the exposure to loss is not considered insurable for one or more reasons. Some of the more common exclusions are:
  • Expected or Intended Injury
  • Contractual Liability
  • Employment-related Practices
  • Pollution
  • Aircraft or Watercraft
  • War
  • Damage to Property
  • Damage to Your Product
  • Damage to Your Work
  • Recall of Products, Work, or Impaired Property
  • Professional Services
  • Copyright Infringement
  • Criminal Acts
  • Electronic Data Property Damage

Always review the coverage form carefully for other limitations and exclusions.


Conditions are obligations you owe the insurance company as well as obligations the insurance company owes you.

  • Appeals
  • Bankruptcy
  • Duties in the Event of Occurrence, Offense, Claim, or Suit
  • Legal Action Against Us
  • Other Insurance
  • Premium Audit
  • Misrepresentations or Fraud
  • Separation of Insureds
  • Transfer of Rights of Recovery Against Others to Us
  • When We Do Not Renew
  • Loss Payable
  • Transfer of Defense
  • Maintenance of/Changes to Underlying Insurance
  • Expanded Coverage Territory


Numerous endorsements are available that broaden, limit, or exclude coverage.

ISO Umbrella & Excess Liability Insurance Forms

  • Commercial Liability Umbrella Coverage Form
    1. Coverages – Section 1
    2. Who Is An Insured – Section 2
    3. Limits Of Insurance – Section 3
    4. Conditions – Section 4
    5. Definitions – Section 5
  • Commercial Excess Liability Coverage Form
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