How Commercial Umbrella Insurance Benefits Your Business

August 28, 2024 / 5 mins read

What happens if your Toronto business faces a significant lawsuit or court-ordered settlement that exceeds what your insurance covers? Can you afford that?

Commercial umbrella insurance benefits your Toronto business because it helps cover liability costs that go beyond your coverage limits on commercial general liability insurance, commercial auto insurance, product liability insurance, and employers’ liability insurance.

If you are a business owner in Toronto, the Greater Toronto Area (GTA), or elsewhere in Ontario, your Western Financial Group business insurance expert will give you top notch commercial insurance advice and at the right value for you.

What is commercial umbrella insurance?

Commercial umbrella insurance, also known as just umbrella insurance, addresses liability coverage gaps. It’s used when the primary liability coverage, for example on your commercial general liability insurance, has reached its coverage limit.

The protection that umbrella insurance provides applies only to expenses related to liability such as legal fees, court fees, and legal settlements.

It’s important to note that umbrella insurance can’t be added to policies that are not for liability insurance and cannot be applied to costs that don't involve a lawsuit.

Who needs umbrella insurance?

The following businesses would benefit from commercial umbrella insurance:

Legal costs and settlement expenses can easily go beyond $1 million. As a Toronto business owner, you could find yourself dealing with how to find the money to cover costs that exceed the coverage limits on standard liability policies.

Toronto businesses that deal with higher levels of risk, have considerable assets, or face potential lawsuits can benefit from the additional coverage of umbrella insurance.

Construction/contractors
Hotels, bars, restaurants
Event venues
Manufacturing
Professional services such as accountants, architects, consultants
Cleaning businesses

How much does umbrella insurance cost for Toronto businesses?

There is no set price for umbrella insurance. It will depend on factors such as the size of your business and what sector it’s in, number of employees, location, annual revenue, and any past insurance claims.

Why is it called “umbrella” insurance?

The reason that it’s called “umbrella” insurance is because it’s a separate policy from your other basic liability policies, such as commercial general liability insurance or commercial auto insurance. It’s designed to cover any gaps/limits in your liability coverage.

Examples of how umbrella insurance works

A client slips and falls at your Toronto business, breaking her hip and wrist as well as suffering a head injury. The lawsuit and medical expenses are beyond the limits of your general liability coverage. A commercial umbrella policy would cover excess costs, avoiding financial difficulties for your business.

The cost and settlement of a class-action lawsuit against your company for a defective product that has made users of the product sick exceeds your product liability insurance. With commercial umbrella insurance, you have an additional layer of protection to cover the excess legal costs.

Here’s an example of when umbrella insurance would not apply to your Toronto business

Your business’s headquarters were vandalized with graffiti and a fire was set in your office. Your commercial property insurance would help cover the vandalism and any repairs to your office, not umbrella insurance because it doesn’t involve a lawsuit. It’s not a liability insurance claim in this case.

How to determine if your Toronto business needs umbrella insurance

Review existing coverage: You need to understand the coverage limits of your primary insurance liability policies and identify any gaps in coverage.

What risks does your business face: Assess all risks that your business could face and how much coverage any legal costs and settlements would be covered under existing policies.

You are working hard to build your Toronto business. Protecting it with business insurance can help give you one less worry as you grow your business.

What kind of insurance coverages do Toronto businesses need:

Here’s an insurance checklist for your Toronto small business:

Do you have the best business insurance rate that suits your work?
Do you have the right amount for your deductible and regularly review it to make sure it’s the right amount for you?
Are you or your employees using personal vehicles for work?

What do I do if my Toronto business has an insurance claim?

Contact your broker immediately after any business-related mishap. Waiting to file a claim can confuse insurers about the severity of the damages to your business.
Know your policy so that when you contact your broker you are familiar with what will be covered or not.
Document the damage. Take photos right away and write down what happened.
Do not throw away damaged goods after taking photos. Keep the physical evidence so that your adjustor can see it.
Do not invite lawsuits. Don’t say anything that could be used against you, especially if you aren’t sure what happened.
Be honest about what your damaged property is worth. Damaged commercial property is generally valued according to its actual cash value or replacement value.

Western Financial Group has licensed BUSINESS INSURANCE EXPERTS to get your Toronto small business the right commercial insurance package. Our experts are available now to help you navigate the commercial insurance journey to protect your Toronto business.

Please share this article with your friends

Talk to an Insurance Expert

Call Us Now 888-595-3104