The Umbrella Policy

Finally, when deciding how to structure a small business's insurance plans, consideration should be given to purchasing an umbrella policy. This type of policy is designed to provide supplemental comprehensive liability and property coverage (subject, as always, to exclusions).

An umbrella policy is always purchased as an adjunct to the coverage offered under standard policies. It pays off on a covered matter only after the primary insurance is exhausted.

Premiums typically are affordable because the risk to the insurance company that the policy will be activated usually is low, due to the existence of the primary insurance.

Because it offers comprehensive secondary coverage, an umbrella policy can cover losses due to very divergent causes, such as losses associated with a building or losses due to an automobile accident. As always, a careful advance reading of the policy is recommended to determine the breadth of coverage.