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Commercial Insurance :: Why Your Business Needs an Umbrella Liability Policy


Undoubtedly, you have worked extremely hard to build your business, and it represents your livelihood. Unfortunately, all it takes is one liability claim to put you out of business. You have surely heard the stories on a regular basis, and while the odds may be against such a thing happening in your business, not everyone is fortunate enough to play the odds and win.


Most small businesses need
at least a $5 million umbrella policy,
while medium-size, large, and high-risk businesses
need significantly more.


Here are examples of real-life cases that cost millions to settle:

  • $1,750,000 Premises Liability – Fall Down – Plaintiff falls on icy patch in parking garage – Traumatic Brain Injury – Latent Post Traumatic Stress Disorder from military service is triggered – Loss of consciousness.
  • $3,626,400 Gross Verdict  Reduced By 25% Comparative Negligence – Landlord’s Negligence – Sawdust  and wood shavings left throughout  apartment. Landlord removed  built-ins – Plaintiff slips and falls – initial lumbar bulge progresses  o herniation, then extrusion – Surgery seven years later – Resolving cervical herniation.
  • $4,842,000 Verdict – Failure of housing authority to repair clogged drain in dark boiler room. Fall – aggravation of  prior soft tissue injuries which were superimposed on spondylosisthesis- cervical herniation – inability to work- Plaintiff’s family allegedly required to relocate to native Greece because of inability of plaintiff to provide for family.
  • $4,000,000 Confidential Recovery – Motor Vehicle Negligence – Intersection Collision – Plaintiff’s vehicle is struck by the defendant’s truck when it rides through stop sign at intersection – Brain injury alleged – Post Concussive Syndrome – Concussion – Herniated discs.


Successful business owners practice risk management because they know things like this can happen.
By having adequate insurance, including an umbrella liability policy, business owners can run their businesses with minimal disruption. If, on the other hand, a business has insufficient insurance – such as a $1 million per occurrence liability policy when faced with a $4 million claim – this will result in serious financial and possibly reputation-related issues that need to be resolved.

Most small businesses need at least a $5 million umbrella policy, while medium-size, large, and high-risk businesses need significantly more. As illustrated in the cases listed above, it is not uncommon for incidents to run into the millions. For many business types, having a multi-million-dollar umbrella policy is not expensive and is well worth the protection it provides. In addition, most policies come with unlimited defense, which provides legal defense with attorneys who are experienced in settling similar cases.

The cost of not having sufficient coverage for a given claim is huge, and it has the potential to put you out of business. In addition, it can be next to impossible to sell a business with a pending legal incident. Bankruptcy due to a lawsuit can also ultimately put you out of business as well as deplete your net worth and ability to sell the business. For these reasons, an umbrella should always be discussed when putting together your business insurance program. Simply having a policy is not enough; it is vitally important to ensure that you get the right coverage.



G.R. Reid Insurance Services works to educate our clients about the risk factors that surround their industry so we adequately safeguard unforeseen
exposures to their business operation. Contact us to discuss your risk management and insurance needs.

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