Umbrella Policy – Not Just For Your Lender

“Whether required by your lender or not, an Umbrella policy is highly recommended, especially considering the cost”

When it comes time to purchasing a policy for your building the focus lies on the property coverage and rightfully so, but your liability stemming from your business operations and premises liability is equally as important. We’ve all become accustomed to the standard primary General Liability limit of $1,000,000 per occurrence but do you need coverage beyond this? Many lenders think so and require anywhere from an additional $1M to $10M limit to be purchased in addition to the primary $1M liability limit. Whether required by your lender or not, an Umbrella policy is highly recommended, especially considering the cost.

Various underwriting factors come into play when pricing your umbrella policy but very similar to the General Liability coverage it can be broken down to a cost per-unit with rates as low as $8 per-unit (for apartments) for a $1M limit. Again, various underwriting factors will come into play along with the desired umbrella limit to determine your final premium rate.

In terms of what can lead to increased liability exposures, many areas of your property can lead to an increase in exposure such as:

•Crime prevention and security to general premises liability such as trip & fall and lack of safety

•Swimming pool and hot tub safety – lack of supervision and/or lifesaving equipment

•Parking lot/Parking garage – lack of security and safety

•Clubhouse, fitness center, and laundry room facilities – lack of security and safety

•Fire Safety – lack of fire detection, life safety, and prevention

•Privacy Breach

•Construction or renovation projects occurring on the property

•Special Events occurring on the property

It’s important to consult with your property manager and insurance broker in regard to risk management practices that can help reduce or eliminate claims from occurring on your property. Unfortunately, bad things can happen to good people and well-run companies, and for those many situations that can’t be prevented it’s important to have comprehensive coverage including an Umbrella to protect your bottom line.