How an Umbrella Policy Can Save Your Business
Hi, I’m Jeff Gordon from Gordon Atlantic Insurance. This is a common theme: if you’re a regional player in your business and suddenly you’re dealing with the big boys. The big boys want to transfer their risk back to you and say “if something really bad happens, it’s not on us, it’s on you.”
Determining the Amount of Coverage That You Need
They’re going to ask for what’s called an umbrella policy. Typically, we see umbrella policies for as little as a million dollars over the first million of your basic coverage, or higher limits: two million, five million, or even ten, twenty-five, or fifty million, depending upon what kind of business you’re in.
What Is the Second Deductible?
We know that in insurance, there are really two deductibles. There’s the first deductible, which on your car insurance is the first five hundred dollars that you pay if you hit a tree. But at the top end is the other deductible.
Keep Yourself from Self-Insuring
If you don’t have enough insurance, you are self-insuring anything over that insurance amount. Sometimes you’re going to be in a situation where you really need a lot of insurance. This isn’t necessarily driven by a big contract.
What Do I Need to Consider When Buying an Umbrella Policy?
What happens if you’re a regional player and suddenly you’re playing with the nationals? It could happen that you have a transportation business and you deliver a lot of goods. You’ve got a bunch of trucks on the road. What’s going to happen when that phone call comes in? A truck just hit a school bus, or it just went off the road and wiped out a business.
When something really bad happens, umbrellas can provide those extra layers of liability coverage. How much does an umbrella policy cost? It depends. If you’re a company that has a large transportation exposure, you have rolling steel and glass on the highways. This can cause a lot of damage.
Could Your Product Hurt People?
If you’re in a business where your products can hurt people, food products or kids toys, there are all kinds of things that can go wrong. When something goes wrong, there can be a massive recall. And these things can get very expensive.
Depending upon your business and depending upon what you have underneath the umbrella, the cost will be determined by your insurance.
Talk to Your Insurance Broker
It’s not complicated, but extra liability insurance is what an umbrella is all about.
About Geoff Gordon
Geoff Gordon has been the owner/president of the Gordon Atlantic Insurance agency since 1987. Gordon Atlantic Insurance provides commercial and personal insurance to businesses and families throughout Massachusetts.
A prolific writer and recognized industry thought leader, Geoff has contributed articles to Banker & Tradesman, a regional trade periodical, and served on the Quincy Patriot Ledger’s Board of Economic Advisors column. He is a member of the Plymouth Rock Assurance Agents Advisory Council as well as the Bunker Hill Insurance Agents Advisory Council. Geoff has presented to the Financial Planning Association’s (FPA) education series and teaches locally. Most recently Geoff spoke to a TEDx conference on “Personal Risk for a Rich Life” in February 2016.
Geoff obtained his Certified Financial Planner (CFP®) designation in 1985, the Certified Insurance Counselor (CIC) in 1995, and his Certified Risk Manager (CRM) designation in 2004, and serves as an Asssociate Faculty member of the Institute of Insurance Education and Reasearch, a national credentialling organization.