Does Your Massachusetts Business Need Commercial Umbrella Insurance?

Your Massachusetts business is your livelihood, and you can protect it with the right levels of business insurance. Now that the cost of labor, materials, and claims have increased, you may want to check if the limits on your commercial umbrella insurance policy are high enough to protect you from out-of-pocket expenses. Our team here at Cross Insurance wants to ensure that you have the proper amounts of protection for your Massachusetts business. Click here to contact an agent today to discuss your options.

Your Massachusetts business most likely has a Business Owner’s Policy (BOP). However, does your business offer a commercial umbrella policy? Commercial umbrella policies are in place in case a claim exceeds the limits of your existing policies. If you do have commercial umbrella insurance, are the limits high enough now to reflect the rising costs of labor, materials, and claims?

What is a Commercial Umbrella? 

Commercial umbrella insurance can add an additional layer of liability protection above the limits of other insurance policies. For a covered loss, the underlying policy’s limit will be used first, when it has been exhausted, the umbrella kicks in. If you do not have business umbrella coverage, you risk having to pay out of pocket for claims that exceed your policy limits. These costs may include:

  • Medical Bills
  • Bodily Injury
  • Court Judgments and settlements
  • Legal Expenses
  • Third-party property damage

Commercial Umbrella Insurance may be able to provide coverage for:

  • Employee Injury
  • Customer Injury
  • Wrongful Termination Lawsuits
  • Auto Accident Liability
  • Reputational Damage
  • Product Liability
  • Libel

It can be important to note that business umbrella insurance isn’t a standalone policy. You will need to carry a certain amount of coverage on an underlying policy before you can purchase umbrella liability insurance.

Which Businesses Need a Commercial Umbrella? 

Commercial umbrella coverage is not a one size fits all product. Certain industries can be at a higher risk of being sued by employees, customers, or other businesses due to the types of products or services they provide. If your business could benefit from additional insurance protection than what your primary insurance policies provide, you may want to look into purchasing commercial umbrella coverage.

A business that meets the following criteria may want to research increasing their liability risks and could potentially benefit from investing in commercial umbrella coverage:

  • Businesses where you or your employees work on other people’s property.
  • Businesses that have one or more commercial properties that are open to the public.
  • Businesses with a contractual obligation to carry business umbrella insurance.
  • Businesses that use heavy or dangerous equipment or machinery.
  • Businesses that are at high risk of a lawsuit. However, nowadays this describes most businesses. Lower risk of lawsuit may include home-based sole proprietorships that have no employees and no direct contact with clients, yet even then, exceptions may occur.

A working example of why a business would want to carry umbrella insurance could be if contractors might be asked to show proof of insurance with specified limits when working with certain clients. General contractors that are remodeling a home would need to have workers inside a client’s homes who could accidentally damage the client’s property. Businesses that have commercial vehicles also face the risk of an employee causing an accident or injuring someone else or a third party’s property. Situations like these could potentially trigger lawsuits that would incur costs and judgements exceeding standard policy limits.

Additionally, since inflation is driving the cost of claims higher, many contracts now require businesses to have a commercial umbrella to provide higher policy limits.

Prepare for Costly Lawsuits with Commercial Umbrella Insurance in Massachusetts 

Society has become increasingly litigious, therefore now more than ever, Massachusetts businesses, no matter the size, need to be prepared for the possibility that an employee, client, or business associate could bring a costly lawsuit against them. Legal endeavors can cost over tens of thousands of dollars, that can be financially devastating for a business without adequate insurance protection. Commercial umbrella coverage may help make up for the difference when other insurance policies limits are exhausted.

For example, if you own a store and while shopping, a customer is injured and sues your business for $1 million but you only carry $500,000 in liability coverage, a commercial umbrella policy could make up for the $500,000 difference.  Alternatively, without a commercial umbrella you could be out of pocket $500,000, which could potentially bankrupt a small business. However, before using business umbrella coverage, you must first exhaust your underlying insurance coverage.

What’s the Difference Between Commercial Umbrella Insurance and Excess Liability?    

Commercial umbrella coverage is different than excess liability coverage. Excess liability coverage can extend the limits on one specific liability policy, whereas commercial umbrella coverage can extend the limits of several different policies. Therefore, commercial umbrella coverage can provide broader more flexible coverage.

What Doesn’t a Commercial Umbrella Policy Cover? 

Commercial umbrella coverage is great for adding an additional layer of liability protection above the limits of other insurance policies, however, there is no insurance policy that provides unlimited protection. Commercial umbrella coverage typically will not add coverage to a professional liability policy. Commercial umbrella insurance also may exclude coverage for the following:

  • Liability for Criminal Activity
  • Property Claims: Whether Personal or Commercial Property
  • Damage Done Intentionally on Your Part
  • Liability You Agreed to Under Contract

How Much Does Commercial Umbrella Insurance Cost? 

Just like most types of insurance, the cost of commercial umbrella coverage may vary depending on a variety of factors including the amount of coverage, the state you live in, your specific risk factors such as the number of employees and number of vehicles, and your claims history. If you are interested in the cost of commercial umbrella coverage for your business, contact us here, and a member of our knowledgeable commercial insurance division can show you your commercial umbrella coverage options.

Are the Limits of My Commercial Umbrella High Enough?   

When reviewing limits for your commercial umbrella, our team at Cross Insurance will consider several factors including your company’s level of risk, any contractual requirements you may have, whether you have a fleet of commercial vehicles, and any past claims size and frequency. Since the cost of claims and lawsuits have skyrocketed, it may only take one catastrophic occurrence to risk your business and your livelihood.

Commercial Umbrella Quotes from Cross Insurance 

If you are interested in learning more about how commercial umbrella coverage could help your business, requesting an insurance quote is as simple as filling out our form here. If you would prefer to call someone to start the quoting process, you can find a list of our office phone numbers here. 


This article is for general informational purposes only and is not to be relied upon or used for any particular purpose. Cross Insurance shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, insurance, accounting or other professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. The views expressed in this article are that of its author and do not necessarily represent the views of Cross Financial Corp. and its subsidiaries and affiliates (“Cross Insurance”) or Cross Insurance’s management or shareholders.

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