Commercial Umbrella Insurance

Commercial umbrella insurance activates when the limits of an underlying liability policy, such as general liability, commercial auto, or employers liability, are exhausted by a claim. If your general liability policy has a $1 million per-occurrence limit and a tenant's guest suffers a catastrophic injury resulting in a $2.5 million judgment, the umbrella policy would cover the $1.5 million that exceeds your base policy limit.

Umbrella policies typically provide coverage in increments of $1 million, with many apartment owners carrying $5 million to $10 million in umbrella limits depending on the size and risk profile of their portfolio. The policy follows the same terms and conditions as the underlying policies it sits above.

In some cases, an umbrella policy may also provide broader coverage than the underlying policies, picking up certain claims that are excluded from the base layer. However, this varies by policy, and apartment owners should review their umbrella terms carefully to understand exactly what additional coverage, if any, is provided.

Liability judgments in serious injury cases regularly exceed $1 million, which is the standard per-occurrence limit on most general liability policies. Catastrophic injuries involving permanent disability, traumatic brain injury, or wrongful death can result in judgments of $5 million or more. Without umbrella coverage, the apartment owner would be personally responsible for the amount exceeding their base policy limits.

Apartment properties face a wide range of liability exposures due to the volume of people on the premises, the variety of amenities offered, and the inherent risks of maintaining a large physical structure. Swimming pools, fitness centers, parking garages, and elevators all increase the potential severity of injury claims.

The cost of umbrella coverage is relatively modest compared to the amount of additional protection it provides. Premiums for a $5 million umbrella policy are typically a fraction of what the underlying general liability policy costs, making it one of the most cost-effective ways to protect against catastrophic liability exposure.