Imagine that you are contacted to perform a particular task as a contractor. As a private contractor, you have the manpower, the tools, the vehicles and most importantly the skills to get the job done. However, as you speak to the client, they start talking about your insurance coverage, and this has you thinking. As a contractor, you are aware that you will need some sort of protection and you may already have general liability insurance. In many cases, you may take on a project that requires you to have insurance coverage for 500 K, but your general liability coverage is only 250 K. What do you do? One very brilliant option is Umbrella Coverage. Umbrella Liability can provide the additional coverage required to finalize that contract. To have this additional umbrella coverage, it may cost you just a few hundred dollars a year; however it is totally worth it for your business.
How Umbrella Coverage Protects Your Business
You may be undertaking a project that you are adequately protected for with your general liability coverage, but what if something catastrophic happens, what will you do? What if your general liability insurance isn’t sufficient to cover everything? That is where your umbrella coverage will come in handy. This doesn’t mean that umbrella coverage is only for when your business requires additional coverage, but also when your business is faced with a claim that is more than your underlining policy which includes:
- General Liability Claims: This claim will come in handy as it will protect you in cases of miscellaneous occurrences while on the project site, if it is more than your policy.
- Employer Liability Claims: Employer liability will protect you against lawsuits that are linked to workers compensation. If a worker is inured on the job, their worker compensation benefits will compensate them for any loss of earnings. However, if in the event the employee decides to file a law suit for something else and your employer liability is not sufficient to cover, your umbrella liability will kick in and cover the missing amount.
- Commercial Auto Claims: Depending on what types of services you offer as a contractor, you may have business vehicles. For these vehicles, you will have signed up for commercial auto insurance. However, if one of your vehicles is in an accident that involves multiple people and incurs serious injuries or even death, your commercial auto coverage may not be sufficient to cover everything. Again your umbrella coverage can kick in and provide the missing amount required to do everything.
By now we can see that having umbrella coverage is beneficial, and can cover lots of scenarios that can get a contractor in serious trouble. However it is important to note that it does not cover everything, so one must be adequately prepared for whatever may happen. In cases such as your property insurance, if you have issues with your property, your umbrella coverage will not cover you there with claims.
In many cases, contractors put themselves at risk either by not reading their insurance policy properly or by not contacting their insurance companies and trying to settle claims to avoid further problems in the event of a lawsuit or other incident. These people sometimes use up their umbrella coverage when there may not even be a need to.
Impotant Points about Umbrella Coverage
In light of the above, there are some key take a ways for contractors who may be in the middle of a lawsuit of settling some sort of claim and their normal general liability coverage is insufficient. In the event that the umbrella coverage is what is going to be needed, these contractors should take the following into consideration:
- Consult your insurance provider first: Before you settle a lawsuit or any type of claim, you should always consult your insurance provider first. They can help you with your claim, conduct their own investigation as to the causes and may even help you negotiate a lower settlement.
- Always read your insurance policy: This is important so that you can know exactly what you’re covered for. You need to know how much is your general liability as well as your umbrella coverage and also what you’re covered for. Most importantly, you need to ensure that the policy covers the type of work that you do.
- Ensure your insurance company is legally protected: This will help you in the long run with claims and anything that can go wrong legally.
It is normal that in many cases people will want to settle lawsuits and other claims as soon as possible to avoid further problems, however, to ensure that you do not end up losing in the long run, you should always consult with your insurer.
Laws are always changing as time goes by so it will always be wise for a contractor to keep up to speed with some of the changes taking place. In many provinces, the laws governing umbrella coverage may be different and some may have changed. Contractors owe it to themselves and their business success to always know how changes in the laws can affect them and their current insurance coverage. They need not just accept any policy being offered to them. The policy needs to cover them and all the activities they will be involved in.
Finally, it is important to reiterate that having umbrella coverage will help you as a contractor as it comes in handy especially when the value of your lawsuit or claim is more than the general liability insurance coverage you may have. This help you with commercial auto claims for issues with any company vehicles, general liability claims and employer’s liability claims in the event there is any kind of suit brought on by employees. One of the key take aways from this is to always consult your insurer before settling any kind of claim, especially when your general liability coverage is not sufficient and you have to start using your umbrella coverage. If you need help getting umbrella coverage, be sure to fill out a qoute and we will contact you within on businss day!