Umbrella insurance is a type of insurance policy that covers the excess losses. Generally the umbrella insurance assists the existing insurance policies. This insurance gives additional benefits to your insurance policy. Umbrella insurance is a liability insurance that goes above and beyond what typical insurance policies do. It protects the assets and potential future income of the policyholder more than the regular policy.

Generally umbrella insurance is also called as umbrella liability insurance, and some companies also call it as excess liability insurance. But some insurance professionals have noticed that there is a difference between the excess liability insurance and umbrella insurance. The excess liability insurance offers only the extension of the same coverages provided by the underlining policies, while the umbrella insurance policy fills some gaps by giving coverages for the losses that are not secured by the underlining policies. Umbrella insurance provides more coverage in all areas for a small business, such as:

  1. In an accident, if your commercial or business vehicle completely gets damaged and your commercial auto insurance cannot pay for the whole loss, as it has certain limit, umbrella insurance covers the complete auto insurance. For example: A business gets commercial auto loss worth of $ 50,000 and their commercial auto insurance has limit for loss coverage, such that, it can only pay worth of $ 30000. In such cases, if the business has umbrella insurance then the remaining worth $ 20000 will be paid by the umbrella insurance. Hence the umbrella insurance gives complete coverage for policyholder.
  2. Umbrella insurance gives additional coverage for building insurance. If a business gets huge building and property loss due to earthquake or flood, and not even the building and property insurance the business has is providing full coverage from that policies because of the loss worth which is more than the limit of that policies, then the umbrella insurance can get full coverage for those losses.

Keeping all the above benefits in view, we can say that umbrella insurance is very useful for small businesses in providing more coverage for the losses.