Commercial umbrella insurance—sometimes called excess liability—adds higher liability limits above your existing policies. When a claim exceeds the “underlying” policy’s limit, your umbrella can step in to pay the remainder up to its own limit, helping protect cash flow and assets.

What Does a Commercial Umbrella Cover?

Umbrella policies generally sit over these liability coverages:

General Liability (GL): Bodily injury, property damage, and personal/advertising injury to third parties
Commercial Auto Liability: Injuries or damage you cause while operating covered autos
Employer’s Liability: Third-party suits related to employee injuries (as part of Workers’ Comp)
Sometimes other scheduled liability policies (depends on the carrier)

Key features:

Excess Limits: $1M–$10M+ available; purchased in $1M layers
Defense Costs: Often follow form of the underlying—read the policy to confirm whether defense is inside or outside the limit
Self-Insured Retention (SIR): May apply when no underlying policy responds

What’s Not Covered (Common Exclusions)

Umbrellas don’t fix coverage gaps; they provide more limit over what you already have. Typical exclusions include:

Professional liability, E&O, D&O, employment practices liability (unless specifically scheduled)
Intentional or expected injury
Contractual liability beyond what’s covered in the underlying
Property damage to your own property
Workers’ compensation benefits (the policy sits over Employer’s Liability, not WC benefits)
Pollution and cyber unless scheduled (often excluded)

Tip: If you need broader protection (e.g., cyber, pollution), consider dedicated policies with their own limits; some carriers allow scheduling those under an umbrella/excess, but terms vary.

How It Works (Simplified Example)

Your GL policy has a $1,000,000 per-occurrence limit
You buy a $4,000,000 umbrella
A customer slip-and-fall results in a $2,200,000 judgment
GL pays $1,000,000; the umbrella pays the remaining $1,200,000 (subject to policy terms)

If the underlying policy doesn’t respond (e.g., an excluded peril), the umbrella may also deny—unless it’s a true excess policy with different terms and an SIR. Always confirm “follow form” language and any drop-down provisions.

Who Needs It?

Consider a commercial umbrella if you:

Work under contracts that require total limits above $1M per occurrence
Operate in high foot-traffic areas or perform on customer premises
Run fleets, job sites, cranes, or heavy equipment
Face potential high-severity claims (e.g., construction, manufacturing, logistics)
Lease from landlords who mandate higher liability limits

Choosing Limits

Use a blend of:

Contractual requirements (customer, landlord, lender)
Industry benchmarks for severity risk
Asset and revenue protection goals
Risk tolerance, safety culture, and claims history

Many growing firms choose $2M–$5M; larger or riskier operations may need $10M+.

Underwriting & Cost Factors

Industry/class code risk profile
Size of operations (revenue/payroll/vehicle count)
Loss history (frequency and severity)
Safety programs and fleet/driver controls
Underlying policy limits and carriers

Umbrella premiums are typically efficient relative to the added protection; cost per added $1M often decreases as you add layers.

Takeaways

Umbrellas extend limits—they rarely broaden what’s covered
Verify underlying minimums and follow-form language
Match limits to real-world loss potential and contractual needs
Review exclusions so you’re not surprised at claim time

If you’re unsure what limit is appropriate, we can benchmark your risk and model high-severity scenarios to guide an informed decision.

Next Steps

Learn the foundation your umbrella sits on: General Liability Insurance
If you operate vehicles: Commercial Auto Insurance
For employee injury–related third-party suits: Workers’ Compensation Insurance
Make products? Review: Product Liability Insurance

Commercial Umbrella Insurance

When a commercial umbrella helps