Author Box
Articles Categories
All Categories
Articles Resources

Frequently Asked Questions About Business Insurance Umbrella Policies

April 18, 2012 | Comments: 0 | Views: 168

What is Business Insurance?

Insurance is risk management, whereby individuals and organizations hedge against risk by transferring it to another entity, at a cost. Business insurance is a form of risk management specifically suited to companies, including sole proprietorships. Business insurance is available in a wide array of formats, including a business owner's policy (BOP) and a professional indemnity (PI) insurance policy. While most businesses have insurance to hedge risk, there is insurance that the government requires by law.

What is a Business Insurance Umbrella Policy?

The great difficulty with hedging risk is recognizing it, as in recognizing specific risks as well as understanding how much of any one risk item there is. In some cases, it is practically impossible, so umbrella insurance is an object designed for such scenarios. In simple terms, a business insurance umbrella policy is responsible for various broad schools of risk and the policy assigns a maximum obligation to each school. When a claim-worthy incident occurs, the insurance company assesses the incident and then assigns it to the most appropriate school of risk.

What is Umbrella Liability Insurance?

The most important form of business insurance is liability insurance, and the most common form of a business insurance umbrella policy is a liability insurance umbrella. Due to the nature of liability, a company risks its immediate assets as well as its future income whenever it does business. Liability insurance hedges against that risk, and an umbrella policy protects the company against a myriad of circumstances rather than dictating situational coverage and so forth.

What are the Umbrella Liability Insurance Basics?

Umbrella insurance is, by its nature, more expensive than standard insurance. Therefore, most commercial umbrella insurance tends to be in addition to other policies. A company will have a core policy and if a claim-worthy event is specifically covered by it, then the core policy handles it. Otherwise, the umbrella policy drops down to fill the gaps in the core policy. Typically, an umbrella policy covers pure liability, and insurance companies sell it in increments of a $1 million dollars.

How is an Umbrella Policy Rate Calculated?

The calculation of business umbrella policy rates can be complex depending on the type of insurance. Above, we mentioned umbrella liability coverage that usually covers pure liability in increments of a million dollars. In those cases, the calculation is simple, and the insurance companies just multiply the per-million rate by the number of millions in coverage. In advanced scenarios, it depends on an estimate of risk as well as the particular industry, past performance, total worth, credit history and so forth.

How is the Lowest Possible Business Insurance Rate Achieved?

Achieving the lowest commercial umbrella insurance quotes is not much different from shopping for auto or home insurance for individuals. Rates fluctuate greatly, so comparison-shopping is the key to success. The Internet is an amazingly effective tool for insurance purchasers, and that is true for companies as much as it is individuals. Without the Internet, companies are limited by their local options as well, but with it, they are able to find a remote insurance company that best meets their needs.

Ailene Bridges has been in the business industry for years and knows how uncertain businesses are. For this reason, she has seen the need to share her insights about business insurance umbrella policy in order to provide guidance to business owners out there.

Source: EzineArticles
Was this Helpful ?

Rate this Article

Article Tags:

Business Insurance Umbrella Policy

Auto insurance is probably one of the most expensive insurance types in Canada. An average car insurance policy in Canada costs approximately $1,200 per year and in Ontario, the largest Canadian

By: Alex Saltykov l Insurance > Car Auto l July 09, 2013 lViews: 552

Your house is often your largest investment that you need to protect via insurance. We created a list of multiple savings tips related to Home insurance and hope that these will help you to save a

By: Alex Saltykov l Insurance > Home Owners Renters l December 27, 2012 lViews: 379

Most auto insurance companies design specific car insurance policies for classic and antique cars. If you think you have a classic car and want classic car insurance, you will need to be sure that

By: Richard l Insurance > Car Auto l October 17, 2012 lViews: 570

Business Overhead Expense Insurance Plans can provide cash flow to the business in the event of a disability to a key employee or owner. For a small, growing company it might make the difference

By: T. Spencer White l Insurance > Disability l July 17, 2012 lViews: 243

Workers compensation costs are rising. According to a recent report by the Workers Compensation Research Institute (WCRI), indemnity costs per claim (the loss of earning capacity, payments for lost

By: Kelly C. Williams l Insurance > Workers Compensation l July 08, 2012 lViews: 221

One of the most helpful government programs out there is the SSI Disability program. A person that is legitimately disabled, and cannot work to provide an income for themselves for their family

By: Oleg Winter-Burnett l Insurance > Disability l July 04, 2012 lViews: 282

Manufacturing business is one of the complex business types, which involves complicated business operations that may put the capitals at risk. The challenges faced by the business owners are unique

By: Nate Rodnayl Insurance > Commerciall April 24, 2012 lViews: 180

Cleaning up after a disaster that strikes a business can be time consuming and expensive cost. Most commercial insurance policies offer cover for debris removal and fees for professional advice

By: Dave Healeyl Insurance > Commerciall April 22, 2012 lViews: 171

Unfortunately, risks of litigation are growing steadily, with society now having a new love; prosecuting for the slightest problem. Charities are not immune to this despite their ethical standing.

By: Denise Beresfordl Insurance > Commerciall April 20, 2012 lViews: 162

If you own or lease a shop premises or retail outlet, it essential to have the correct security in place to deter thieves. All insurance companies when offering shop insurance to retailers will

By: Dave Healeyl Insurance > Commerciall April 20, 2012 lViews: 175

If you employ a tradesman to carry out any sort of work on your property it is essential that you check that they have the adquate liability insurance cover in place. Failure to check whether a

By: Dave Healeyl Insurance > Commerciall April 20, 2012 lViews: 214

Liability is legal responsibility for damages. When we think of liability, we tend to think of the risk associated with business. Professional liability, however, applies even to individuals,

By: Leony Bridges Juvicl Insurance > Commerciall April 18, 2012 lViews: 135

Discuss this Article

comments powered by Disqus