Top Reasons Minnesota Businesses Should Consider Umbrella Insurance

In the ever-evolving business landscape, it is crucial for businesses to protect themselves from unexpected financial losses. One such protective measure is umbrella insurance. This type of insurance provides an extra layer of liability coverage above the limits of your basic policies. Today, we will delve into the top reasons why Minnesota businesses should consider umbrella insurance.

Understanding Umbrella Insurance

Before we delve into the reasons, it is essential to understand what umbrella insurance is. Umbrella insurance is a type of liability insurance that covers claims in excess of regular homeowners, auto, or business insurance. It provides an additional layer of security to those who are at risk for being sued for damages to other people's property or injuries caused to others in an accident.

It also protects against libel, vandalism, slander, and invasion of privacy. The term "umbrella" refers to how the policy shields the holder's assets more broadly than primary coverage.

The Need for Extra Protection

Umbrella insurance kicks in when the underlying liability limits of your other policies have been reached. For instance, if your business is sued for $1 million for causing property damage, and your general liability insurance only covers $500,000, your umbrella policy would cover the remaining $500,000. This way, your business assets are not at risk.

Moreover, umbrella insurance can cover certain liability claims those other policies may not, such as claims of libel, slander, and false imprisonment. Thus, it provides a broader form of protection.

Reasons to Consider Umbrella Insurance

Now that we have a basic understanding of umbrella insurance, let's explore the top reasons why Minnesota businesses should consider this type of coverage.

1. Protection Against Large Claims

One of the primary reasons to consider umbrella insurance is to protect your business from large liability claims. Accidents can happen, and when they do, the costs can be astronomical. With umbrella insurance, you can have peace of mind knowing that you have an extra layer of protection.

For instance, if a customer slips and falls at your business premises and decides to sue, your general liability insurance may not be enough to cover the medical bills, legal fees, and potential settlement or court-ordered judgment. In such a case, umbrella insurance can cover the excess amount, protecting your business from a significant financial hit.

2. Affordable Coverage

Another reason to consider umbrella insurance is its affordability. Despite offering high coverage limits, umbrella insurance policies are often relatively inexpensive compared to the amount of coverage they provide. This is because they are designed to provide additional coverage after your primary policy has been exhausted, making them a cost-effective way to increase your liability protection.

For small businesses operating on a tight budget, this affordability can make a significant difference. It allows them to secure the protection they need without straining their finances.

3. Coverage for Various Situations

Umbrella insurance provides coverage for a variety of situations that are not typically covered by other business insurance policies. These may include certain types of lawsuits and claims, such as libel, slander, false arrest, detention, or imprisonment, malicious prosecution, shock/mental anguish, and possibly other types of liability claims.

This broad coverage can be particularly beneficial for businesses that face a higher risk of such claims. For instance, if your business involves dealing with the public or clients on a regular basis, you may be more susceptible to these types of lawsuits.

Conclusion

In conclusion, umbrella insurance offers an additional layer of protection for businesses, safeguarding them from potential financial losses that could otherwise have a devastating impact. From providing protection against large claims, offering affordable coverage, to covering various situations, there are several reasons why Minnesota businesses should consider this type of insurance.

While umbrella insurance is not a legal requirement, it is a wise investment for any business. It provides a safety net that allows business owners to operate with confidence, knowing they have the protection they need to weather whatever storms may come their way.