What is Commercial Umbrella Insurance? 

Even with generous primary insurance coverages in place, businesses in New Jersey sometimes still remain exposed to possible risks. Commercial umbrella insurance, or business umbrella insurance, gives businesses a way to enhance the protections provided by their primary policies.

Business umbrella insurance is a supplemental, or secondary, insurance that enhances the coverages and limits of primary, or underlying, policies. A general liability policy, commercial property policy, commercial auto policy or other kind of commercial insurance policy may function as a primary policy. Often, a single business umbrella policy will supplement several underlying policies simultaneously.

Being a secondary form of insurance, a business umbrella policy typically won’t provide coverage until the limits of any primary coverage have been exhausted. Most business umbrella policies have requirements about what underlying coverages must be maintained. Not following a policy’s requirements for underlying coverages could compromise, or even void, the policy’s umbrella coverage.

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What New Jersey Businesses Might Want Business Umbrella Insurance?

Commercial umbrella insurance may be a wise insurance investment for many New Jersey businesses. Here are just a few types of businesses that might benefit from the extra protections that umbrella coverage affords:

  • Businesses that have significant assets, as they may be targeted in a lawsuit
  • Businesses that operate in industries where lawsuits are common
  • Businesses that are at an increased risk of facing a lawsuit due to the products or services they sell
  • Professionals who wouldn’t be able to afford the legal expenses associated with defending themselves in court
  • Any New Jersey businesses and professionals that want more coverage than their primary policies allow

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Is Business Umbrella Insurance the Same as Excess Liability Insurance?

Excess liability insurance and business umbrella insurance are similar, but they aren’t exactly the same. While both are typically used to supplement underlying insurance, they don’t provide the same coverages or supplement the same number of primary policies.

Excess liability insurance policies tend to be “follow form” policies, which means they follow the form of an underlying policy. They usually have the same terms, conditions, coverages, and definitions as the primary policy they supplement. Because excess liability policies typically have the same form as an underlying policy, they usually provide supplemental coverage for just one primary insurance policy.

Business liability insurance policies, in contrast, aren’t follow form policies. Instead, they have their own terms, conditions, coverages, and definitions. This lets them both supplement more than one policy and fill in coverage gaps that underlying policies have.
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How Can Businesses Obtain a Commercial Umbrella Policy?

Business owners in New Jersey that want to learn more about the protections that commercial umbrella insurance can provide, as well as those that know they want a policy, should contact an independent commercial insurance agent. An agent will be able to answer any questions about this type of insurance, help businesses select coverages and find policies, and make sure the necessary primary policies are in place when purchasing an umbrella policy. 

Meet Your Industry Specialist

Jeff Kroeger

Principal, Senior Vice President, and Head of Commercial Lines, Mr. Kroeger also manages the company's hospitality book of business and is that unit's primary producer. He is a graduate of Montclair State University and was named a 2015 Young Gun Insurance Business America.

Jeff has been providing exceptional insurance for restaurants, bars, nightclubs, and more for many years. He understands the unique challenges this industry faces and delivers the right coverage at an affordable price.

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