If you are a business owner, ensuring the stability of your business should be your topmost priority. If you have any experience in this arena, you know the myriad of different kinds of insurance a business is required to have to stay protected.
Excess liability insurance is one of the most important kinds of insurance a business can have. It makes sure that your business is protected against any unforeseen circumstances or lawsuits that may arise. It provides coverage over and above general liability policies, which means it will pay out when they don’t.
Is General Liability Coverage Enough to Cover Me?
The importance of general liability coverage for businesses is apparent from the size of its market. According to Allied Market Research, the marketplace was valued at $252.34 billion in 2021 and is expected to reach $432.81 billion by 2031.
But while general liability coverage covers bodily injury and property damage, it does not cover other types of claims. For example, if one of your clients sues you for invasion of privacy or fraud, the general liability coverage that is provided by the majority of companies will not protect you in these situations.
Excess liability insurance can help fill this gap by providing protection when it comes to other types of claims, such as defamation or infringement. This extra level of protection is essential for anyone working in industries where there is a high risk for these types of claims to arise, such as photography and video production studios.
What Is Excess Liability Insurance?
Excess liability insurance is insurance that covers your business for any liability that exceeds the limits of your primary insurance. It’s designed to protect your business from high-dollar claims, and it’s available for a variety of industries.
What does excess liability insurance cover?
Excess liability coverage can help you avoid paying out of pocket for expensive legal fees if you are sued by a customer or employee. The policy will pay up to additional limits above what is provided through your regular policy without having to get approval from the insurer first. This makes it easier and faster to handle any lawsuits against you.
Why Do I Need Excess Liability Insurance?
Excess liability insurance is important to your business’s risk management plan. If you don’t have it, you could be stuck with thousands of dollars in damages if something goes wrong at your company and you’re sued for it.
Here’s how it works: Excess liability insurance covers the difference between what your primary coverage (usually general liability) pays and what the claim ends up costing you.
For example, suppose someone sues you for $10,000, and they win their case in court. But they won’t receive the money because your primary policy only covers $5,000 in settlements. In that case, the excess policy would pay out the remaining $5,000.
The price of excess liability insurance depends on many factors, such as the size of the business, the number of employees, etc. But on average, it costs $1000 a year per $1,000,000 of coverage. That’s a little over $2.5 a day. So there is absolutely no reason for a smart business owner not to buy this extra layer of protection.
Excess policies are beneficial if your business is located near or working with hazardous materials because they are specifically designed to cover claims that result from these situations.
Some industries, especially high-risk ones, require a certain amount of excess liability insurance. In the case of these industries, it’s important to have adequate coverage in place to protect your business from claims that could otherwise sink it.
You will often find companies that specialize in ensuring certain sectors of the economy. If you own a water filtration plant, you can get your business insured by a company that provides excess liability coverage exclusively for the water industry. By doing so, you ensure that you get the best possible deals and the most useful expert advice.
Some industries, on the other hand, do not require excess liability insurance at all. These are usually industries where risks are minimal or non-existent. For example, if you own an accounting firm and your business never deals with any kind of financial transactions (or even if it does but only on a very small scale), then there won’t be much risk for your clients or customers to file suit against you.
Excess liability insurance is an essential component of any business owner’s life. Don’t be late investing in an added layer of financial security and a good night’s sleep, knowing your business is covered in case misfortune strikes.