When managing risk for your construction business, especially on large or complex projects, understanding how to effectively increase your umbrella liability limits is crucial. Two common approaches are adding coverage on a project-specific basis or layering additional limits over your existing master program.
Here are some items to consider when looking to increase your umbrella limits due to a specific project:
- Compare the cost of the project itself with the cost of adding it to the master program. It’s important to assess the specific expenses of the project, as in many cases, incorporating it into the master program may be less expensive or similar to project specific.
- Carefully evaluate the scope of coverage within the project-specific policy to ascertain that it contains the same coverage as the master program, as the master program may be broader.
- Project-specific coverage may be more expensive due to term and/or completed operations.
- Determine the required duration for the additional coverage based on the contract specifications:
- A master program would need to be renewed each year.
- Projects typically have specific terms with pricing quoted on an annual basis. It is essential to ensure that pricing aligns with the term dates.
- Most contracts require coverage for completed operations; if your term policy excludes this, you must obtain separate pricing for completed operations per the contract.
- Adding umbrella limits to your policy avoids these issues as long as you renew coverage annually for the required limits.
Deciding between project-specific limits and layering additional coverage over your master umbrella policy depends on several factors including cost, scope, duration, and contractual requirements. Carefully evaluating these considerations can help you optimize your risk management strategy, ensuring you have the right coverage in place for each project.
If you need assistance in assessing your current coverage or exploring the best options for your projects, consult with an MMA advisor to develop a tailored approach that aligns with your business needs.
