America is very litigious. Any small business owner knows that a lawsuit can come up at any moment. This is not a matter of if it will happen, but when it will happen. Liability exposure from a major lawsuit could be in the many millions of dollars. Does that mean every commercial insurance policy must have a limit of multiple millions? No, not necessarily.
What are the risks?
Workers’ compensation insurance generally limits the ability of employees to sue for on-the-job injuries. It also limits the ability of the surviving family members to sue an employer in the case of death. The worker’s compensation insurance pays those claims and not the employer. This protection works for most cases, except if the employer’s negligence was a contributing factor.
An example of extensive liability comes from an accident with a vehicle covered by commercial insurance. If people are killed in the accident, liability exposure may be very high. Product liability insurance has the same problem with no upper limit of the risk exposure.
Protecting Net Worth
The solution for most business owners is to protect their net worth and manage the risk of losing everything from a lawsuit by carrying umbrella insurance. Talk this over with your agent at ALLConnecticut Insurance serving West Hartford, CT.
Umbrella insurance provides extended protection of underlying insurance policies. Once those underlying policy limits are reached if a covered claim exceeds these amounts then umbrella insurance provides additional coverage.
Most business owners have umbrella insurance that is at least equal to their net worth.
For example, a business owner with a net worth of $6 million may want to carry commercial vehicle insurance with a $1 million liability limit and general liability with a $1 million limit and then have umbrella insurance with a $5 million limit. This would be the amount that could help protect the $6 million in net worth.
Every business owner’s situation is different so consult with your agent at ALLConnecticut Insurance in West Hartford, CT about how umbrella insurance can help protect you from losing everything.