Umbrella & Excess

When it rains, it pours. Apart from being a very old expression, its also a glass-is-half-empty kind of thought; something a little on the negative side. Now consider the net worth of your business. If your general liability limit is the standard $1 million for each occurrence, is that enough to protect all your business assets? Let’s say you build a custom home worth close to $3 million. The electrical contractor you’ve worked with for years does all the wiring including the water filtration system for the thousand gallon custom designed aquarium that everyone agrees is the coolest thing they’ve ever seen. Unfortunately, custom jobs sometimes come with custom problems. Not long after the home owner moves in, there is a catastrophic fire starting with a negligently installed overheating water pump. The multi-million dollar home is a total loss. $2.8 million to be exact! Your electrician’s liability limit, also $1 million, is quickly used up and now your $1 million is gone too. When it rains, it really does pour leaving you exposed for the balance of the loss - $800,000!

Assuming you don’t have that much disposable cash laying around somewhere, how are you going to finance what is now your responsibility? Maybe your electrical contractor will help and maybe he won’t. The home owners are likely to sue, if they haven’t already. In that case at least your RWC Insurance Advantage general liability policy defended you until your limit was exhausted because defense costs are in addition to policy limits. However, there is simply no money left to pay the rest of the claim or to pay the attorney fees and other costs that keep piling up.

If you think you might be at risk for such a nightmare scenario, then you probably need an umbrella or an excess liability policy. Everyone’s heard of these, but what are they?

A Commercial Umbrella Policy is designed to provide protection against catastrophic losses like this one. It is written over various primary liability policies, such as the commercial general liability (CGL) policy sold by the RWC Insurance Advantage. The umbrella policy serves three purposes: it provides excess limits when the limits of underlying liability policies are exhausted by the payment of claims; it drops down and picks up where the underlying policy leaves off when the aggregate limit of the underlying policy in question is exhausted by the payment of claims; and it may provide protection against some claims not covered by the underlying policies, subject to the assumption, by the named insured, of a self-insured retention (SIR).

An excess liability policy is designed to provide limits in excess of an underlying liability policy. It is no broader than the underlying liability policy; its sole purpose is to provide additional limits of insurance.

Even if you never plan to build multi-million dollar custom homes with huge aquariums, you could still need an umbrella or excess policy. Some questions to think about include, do your total business assets exceed $1,000,000? Do you allow customers, or prospective buyers to visit your jobsites after hours? Do any of your employees operate company vehicles, or their own, while on company time? Do you sponsor sporting events or little leagues, do you invite the public to company events like open house parties? All of these things can lead to possible catastrophic losses.

The RWC Insurance Advantage has partnered with the McGowan Group of Companies to offer umbrella and excess liability coverage to our insureds. Limits up to $5 million are available depending on the state in which your business is located and/or operates. In some states only $1 million over our underlying general liability limit is available.

Don’t let the rain pour down on you. Protect yourself with an umbrella or excess policy from the RWC Insurance Advantage. Contact us today at to find out if you qualify. Just enter “Umbrella or Excess” and your state in the “message” space.

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