The worst thing that businesses have to happen is to have a catastrophic event happen only to find out that insurance won’t cover the incident.

That happens more often than you realize because about 75% of businesses are under-insured.

You certainly don’t want to become another statistic of a failed business due to a lack of insurance. As you look at your policy options, you may ask yourself, “Do I need an umbrella policy or do I just need a general liability policy?”

There are many insurance options for your business. Read on to learn what they are, what an umbrella policy is, and how you can find the right policy for your business.

What is an Umbrella Policy?

You know the saying when it rains, it pours. When something bad happens to your business, it can be very bad. Take someone tripping and falling at your office.

That’s a bad incident, but it could be made much worse because the person’s medical bills are more than what your liability insurance will cover. When it rains, it pours.

An umbrella policy will cover the expenses above your general liability insurance policy.

Another example of how a business umbrella policy works is when you have employees driving for your business. One of them gets in a serious accident and causes damages that go above and beyond your business auto policy.

In this case, your umbrella policy will cover the excess in damages. Most policies will cover about $1 million.

Umbrella insurance is also used for personal insurance policies. For example, if you have an incident on your property that exceeds your homeowner’s property, umbrella insurance will cover you.

Same with a car accident. Your auto insurance will only cover so much, and an umbrella policy will cover the rest.

An umbrella policy isn’t a singular, standalone insurance policy. It is like a supplemental policy that is inexpensive, usually a few hundred dollars a year.

Do I Need an Umbrella Policy?

There are advantages to having umbrella insurance. Do you need an umbrella policy? It depends on your type of business and the umbrella policy.

There are certain types of businesses that are high-risk businesses. The construction industry is a high-risk business because of the number of injuries that can happen on the job. They’re a much higher risk than a regular office.

If your business is at risk of facing lawsuits, such as malpractice, an umbrella policy may be able to provide coverage as well.

If you do decide that you need to get an umbrella policy, be sure to shop around for insurance to find the right policy.

Some insurance companies have a lot of exclusions hidden in the fine print, which may defeat your reason for getting umbrella insurance to begin with.

Types of Business Insurance Policies

Since an umbrella policy works in conjunction with other insurance policies, you want to make sure that your business is protected against all risks. Here are the most common types of business insurance policies you should consider along with

General Liability Insurance

General liability insurance is the business policy that comes to mind for most small business owners. This is the type of insurance you should have if you’re a public-facing company that has customers coming through your doors often.

Gyms, restaurants, and retail stores are usually prime candidates for general liability policies. This will cover slips and falls. Some property damages may be covered under your policy as well.

Professional Liability Insurance

What if you’re a service provider, such as a salon or consultant? If you make a mistake, there could be costs to your customers and they can sue you.

Professional liability insurance is also called errors and omissions insurance. You’ll be covered in these cases.

Cyber Insurance

Every business is at risk of a data breach or security hack. Cyber insurance will help you absorb the costs of these attacks. Most businesses have to close after a breach because the costs of replacing customer trust and lost data is too great.

Home-Based Business Insurance

Are you one of the millions of people who ditched the corporate life and are working from home? You’re not covered by your homeowner’s policy.

You’ll want to get a separate home-based business policy.

How to Find the Best Insurance for Your Needs

Once you realize you have so many options to get insured, it’s easy to get overwhelmed. You want to make sure that you have more than enough coverage for your business.

To figure out what’s right for your business, start by assessing your needs. You should conduct a risk assessment audit of your business. You want to figure out how much contact your business has with the general public and vendors.

Do you keep inventory at your place of business? Do you have assets such as property listed under the name of the business?

These are all potentially at risk in a catastrophic event or an accident. Do you do business online and maintain a database of sensitive customer data? You’ll want to make sure that you also have adequate cyber liability insurance in the event of a hacking attack.

Do You Need Umbrella ?


Your business faces numerous threats every single day. It’s not just from the competition, either. Your business is at risk because of hackers, accidents, and not enough insurance coverage.

If you find yourself asking, “Do I need an umbrella policy,” you need to assess the potential risks to your business. It depends on the type of work that you do, whether your business is a public-facing business, and what your general liability policies are.

If you’re not sure, you should work with an insurance professional that can guide you in the right direction. Before you sign anything, make sure that you read the fine print to fully understand your policy.

If you want more great business tips, check out the Business section often for more valuable content.