Excess & Umbrella: Adding More Liability Insurance Could Save Your Client’s Business

November 27, 2019

As claims costs skyrocket, many Canadian markets are facing increased risk of financial hardship. Commercial transportation clients, for instance, are feeling the squeeze with court cases on the rise from accidents causing bodily injuries, theft of goods, and internet fraud. (1) With the frequency and increasing severity of losses in the shipping and transport industry, commercial transportation clients are just one example of Canadian businesses who will benefit from increased risk and legal expense litigation.

As careful as your client might be, there are unforeseen events that can happen to every business. In some cases, the damages could exceed the insured’s expectations as well as their current coverage limits. This is where secondary coverage in the form of Excess & Umbrella Liability can save a client from a world of headaches.

What is Excess & Umbrella

South Western Group’s Commercial General Liability (CGL) insurance is designed to protect your client’s products and services, whether they’re a wholesaler, store owner, or a professional working in an office. CGL protects large and small businesses from financial losses should they be liable for property damage, personal injury, or advertising injury due to their services, business operations, or employees. It also covers any non-professional negligence for which the business might be held liable.

Excess provides additional limits to an underlying policy, while Umbrella expands coverage to include claims and losses outside the policy’s initial scope, so that business owners can protect their hard work with a policy tailored to their needs.

Does Your Client Need Excess & Umbrella?

Excess & Umbrella protects businesses from unexpected costs while extending their existing coverage. Here are some examples of when your client could benefit from this CGL policy.

1.For large businesses with property in other countries, an Umbrella policy could cover auto liability in a foreign country even though the commercial auto policy does not extend its coverage to foreign countries.

  1. Excess & Umbrella insurance can cover litigation arising from property damage and personal injury that exceeds the limits of the existing policy. For example, a highly-valued executive in the company is injured in a work-related accident, and as a result, not only loses wages but also pay for not only medical bills and rehabilitative therapy.
  2. Excess & Umbrella can also cover associated legal defense costs if the insured gets sued for third party damages - in the event of an unfortunate accident due to negligence, it can be hard to predict how much the court will award an injured party.
  3. Small companies with few assets or businesses just starting out may be obliged to pay off damages in future earnings if they exceed what the firm can afford now.

How Excess & Umbrella Works

For an Umbrella policy to cover claims beyond those covered in the underlying policy, your client needs to pay a self-insured retention (SIR). An SIR is the amount of money your client pays before the insurance company responds to the loss. For instance, if your client has an Umbrella policy with a $10,000 SIR, and they make a claim that costs $100,000, then your client will be responsible to pay their portion of $10,000 (SIR) toward the claim, and then the insurance company will pay the rest.

Coverage Highlights:

  • Our policies include contractual liability
  • Cross liability
  • Contingent employer’s liability
  • Product Completed Operations coverage (Broad Form)
  • Our policies can offer enhancement coverage to include, Faulty Workmanship, Product Recall coverage, Employee Benefit, Employer’s Comprehensive Bodily Injury Liability, Sub-limits for Errors & Omissions, as well as Manufacturer’s E&O and Employment Practices Liability
  • Limits up to $10,000,000
  • Coverage can be provided for sales into the U.S. and Worldwide
  • There is no Deductible applied under Excess Liability
  • Umbrella policies are “Follow-Form of CGL” and will pick up on underlying CGL extension coverages, unless otherwise excluded

More information is available on our website.

Source: https://www.insurancebusinessmag.com/ca/news/specialty-insurance/a-dramatic-rise-in-liabilities-is-putting-the-pressure-on-commercial-auto-190210.aspx

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