What's the difference between umbrella insurance vs general liability insurance? This is a good question as both offer liability protection to your business - but in complementary ways.
Umbrella Insurance vs General Liability Insurance
As a business owner, protecting yourself and your assets is your top priority. One of the best ways you can do that is with insurance. However, when it comes to insurance, there are so many types of coverage available that it can be confusing to decide what type will benefit you the most.
Two common types of coverage include general liability insurance and umbrella insurance. Not sure what the difference is between the two?
Below, we offer an outline of umbrella insurance vs general liability insurance coverage so you can determine which option will best suit your needs.
General Liability Insurance
Also referred to as business liability insurance, this type of coverage offers protection for any general claims that are filed against your business, including claims that involve bodily injuries and damage to property. Whether you're a small local business or you own a chain of national stores, you will likely have a need for general liability insurance.
What Does General Liability Insurance Cover?
General liability insurance policies can help to cover the cost of medical expenses and legal fees that are the result of any claim filed against your company that you are held liable for. This type of insurance covers the following:
- Bodily injuries; for example, if someone suffers a broken bone while on your business' premises.
- Personal injuries, which would include libel and slander.
- Medical expenses that are associated with any injuries you are liable for.
- Legal expenses, including attorney fees, court fees, and settlement fees.
- Advertising injuries; for instance, if you unintentionally used someone else's advertising idea, this policy will provide you with coverage for any expenses that you may incur.
- Damage to someone else's property; for example, if you or an employee damaged a client's personal property, general liability insurance would help to cover the costs.
What General Liability Insurance Doesn't Cover
While a general liability insurance policy offers coverage for various business-related incidents that you could be held liable for, it doesn't cover every aspect of your business. Some of the things that this type of policy does not cover include:
- The property of your business, including the actual structure and the content within it.
- Any professional services that you may offer.
- Compensation to workers if they suffer a work-related injury or illness.
- Any intent to injure.
- Any claims that have been known before the policy took effect.
Commercial umbrella insurance vs general liability insurance. An business umbrella policy offers businesses additional liability coverage for things that are limited under general liability insurance. Essentially, this type of insurance offers businesses with an added layer of protection, for both you and your assets - excess liability. If you do not have umbrella insurance, you could end up having to pay extensive fees out of your own pocket for things are limited by your general liability insurance policy.
What Does an Umbrella Insurance Policy Cover?
As mentioned, an umbrella insurance policy offers coverage for things that are limited under your general liability policy. Examples include:
- A client slips and falls over a wire in your office and sustains an injury. If the medical costs associated with that injury exceed the limits of your general liability policy, an umbrella policy would kick in and offer coverage.
- You were held liable for personal injury and a major lawsuit against your business evolves; however, the costs of the lawsuit exceed what your general liability insurance will cover. An umbrella policy would help to cover the additional costs.
Do You Need Both Types of Insurance?
That depends on your situation. Generally speaking, for smaller businesses that don't work with a large customer base, or don't provide extensive service, a general liability policy would likely be enough. However, bigger companies that are more likely to face legal action would benefit from having both types of coverage.
Umbrella Insurance vs General Liability Insurance - The Bottom Line
We hope this article on umbrella insurance vs general liability insurance has been informative. If you are unsure whether you should simply have a general liability policy, or if an umbrella policy would be a wise investment for you too, speak with a professional insurance agent. An agent will be able to help you assess your risks and determine whether or not both types of policies would be in your best interest.