Umbrella Liability Insurance is a type of personal or commercial insurance that provides additional liability coverage beyond the limits of your existing policies. For businesses, purchasing umbrella insurance provides an extra layer of protection over standard liability policies such as general liability, commercial auto, and employer’s liability insurance. In some cases, it can even extend coverage for professional liability limits. This coverage helps safeguard your company’s assets, including cash, property, and future earnings, from being seized to pay for large claims or settlements that exceed primary policy limits.
Given how legal fees can skyrocket in major lawsuits, umbrella insurance often helps cover legal defense costs in addition to claim payout, alleviating financial stress. Knowing that extra coverage is in place allows business owners to focus on operations without constantly worrying about the financial impact of unexpected, high-cost liability events.
Umbrella insurance also extends coverage to a broad range of claims that may not be covered by underlying policies, including liabilities like defamation and/or invasion of privacy. Here are some examples of umbrella liability claims that a temporary staffing agency might face:
1. Injury to a client’s employee
A temporary worker employed through the agency causes a slip-and-fall accident at a client’s site, resulting in serious injuries. The client sues the agency for negligence, and the damages exceed the limits of the agency’s primary liability policy. The umbrella policy covers the remaining costs.
2. Property damage
A temporary worker accidentally damages a client’s expensive equipment or property during their assignment. The damage surpasses the agency’s primary coverage limits, and the umbrella policy steps in to cover the additional costs.
3. Defamation or false accusations by a temporary worker
A temporary worker makes false allegations about a client’s management team, leading to a lawsuit for defamation. While primary policies may not fully cover such personal injury claims, the umbrella policy provides additional coverage.
4. Claims from a third party
A third party, such as a visitor or vendor, claims injury or property damage caused by a temporary worker during an assignment. The umbrella policy can provide extra layers of protection.
How to prepare for these claims
- Review your current policies to understand coverage limits and exclusions.
- Ensure your umbrella policy is adequately sized to cover potential large claims.
- Implement risk management practices such as safety training, background checks, and clear contractual language to mitigate risks.
- Maintain thorough documentation of all assignments, safety protocols, and incident reports.
Given the extra coverage it provides, umbrella insurance is relatively inexpensive compared to the potential financial devastation of a major claim. If your business interacts with the public, operates vehicles, owns property, or employs staff, it is generally a wise investment.
If you would like assistance in evaluating your current coverage or developing risk mitigation strategies, please contact a Marsh McLennan Agency (MMA) advisor today.
