Liability Protection: What is the Right Limit?

Moira Gettens

Moira C. Gettens, AAI, Oswald Companies
January 2016

How does one protect their business as well as personal assets from a third party lawsuit? Buying an Umbrella insurance policy with a sufficient limit to cover you in the event of a catastrophic loss is the best answer. Liability is one of company’s largest exposures when it comes to an insurance claim.

  • An employee drives their personal car to the bank on behalf of the company and causes a fatal accident.
  • Someone visiting the company’s facility and falls down an unmarked step.
  • Employee is out of work for years due to an injury caused at work.
  • Company owned vehicle used in an illegal activity.

These events cannot be predicted or sometimes even prevented, w hich is why carrying a large Umbrella insurance limit is important. An Umbrella policy follows a company’s liability exposures - General Liability, Automobile (even if there are no owned autos), Workers Compensation and Employers Liability. An Umbrella policy will not only pay for a settlement, but takes on the duty to defend you from unjust allegations. Not all umbrella policies are the same, some are truly excess and others drop down to pay 1st dollar when an exposure is excluded on the General Liability. Ensure your coverage aligns with your assets.

A similar Umbrella policy is needed to protect your personal assets. Consider a limit that protect the total value of your assets plus any future earnings. The coverage follows all homes, autos, watercraft and aircraft.