Decoding the Best Umbrella Policies: Pros & Cons

Jun 20, 2024 | Business Insurance

You’ve carefully curated your brand, hired all the right people, and built a business from the ground up. But even the most carefully laid plans can fall victim to unforeseen events. A hefty lawsuit, a major property claim, or a costly judgment can threaten the financial stability of your business. In the worst cases, it could shut you down for good.

Business owners can protect themselves against financial catastrophe by incorporating umbrella insurance into their commercial insurance policies. Umbrella insurance acts as a safety net, extending the coverage of your existing policies. But is it the right choice for your business? 

Learn more about the best umbrella insurance options for businesses like yours, their pros and cons, and where to find a policy if you need one.   

What Is Commercial Umbrella Insurance? 

Do you know the coverage limit of your existing business insurance policies? You should. For example, most businesses carry general liability insurance policies that cover between $1 million and $10 million. So, if you have a policy with a coverage limit of $1 million, it covers legal costs and damages associated with covered incidents up to that amount. But what if the legal expenses or damages exceed that limit? 

That’s where commercial umbrella insurance can help. It acts as a second layer of liability coverage, kicking in after your primary business insurance policies have reached their limits. It can effectively safeguard your business from larger lawsuits so you can continue to operate.

The Pros and Cons of Commercial Umbrella Insurance 

While commercial umbrella insurance offers valuable protection, it’s not right for every business. Before taking out a policy, consider the pros and cons. 


  • Enhanced liability protection. This is the main benefit of taking out a commercial umbrella insurance policy. With lawsuits and settlements reaching record amounts, exceeding the limits of your primary policy is a very real possibility. Umbrella insurance guards your business assets and your company’s financial well-being. 
  • Broader coverage. Commercial umbrella policies often extend the limits of your primary liability insurance, meaning you are covered for a broader range of claims. That might include advertising injury, product liability, or specific employment-related issues. 
  • Relative affordability. Compared to financial disasters, commercial umbrella insurance policies are pretty affordable. It can be a cost-effective way of protecting your business. 


  • Not a substitute for other insurance policies. Remember that commercial umbrella insurance doesn’t replace your existing policies. It only extends their coverage. You’ll still need to maintain your existing policies in addition to umbrella insurance. 
  • Might not cover all circumstances. It will still have exclusions, so make sure you know what you are covered for (and what you aren’t). Review the policy carefully so there are no surprises in the future. 
  • Potentially high deductibles. Deductibles on umbrella policies can be higher than those on primary coverage policies. That means you’ll need to pay a higher upfront cost before your coverage starts. 

How Much Does Umbrella Insurance Cost?

The cost of commercial umbrella insurance will vary, depending on: 

  • Your industry 
  • Coverage limits
  • Claims history 
  • Business size

To get an accurate estimate of the cost of umbrella insurance, you’ll want to speak to an insurance broker. They can give you an estimate based on your specific circumstances and needs. In general, though, small businesses can expect to pay a few hundred to a few thousand dollars annually for umbrella insurance coverage. 

Find the Best Umbrella Insurance for Your Business With Eber

The best umbrella insurance policy is one that meets your business’s exact needs while fitting into your budget. It can be a valuable tool for safeguarding your Pennsylvania business, protecting you in the case of an expensive lawsuit or claim that exceeds the limits of your primary insurance. 

If you think commercial umbrella insurance might be a good choice for your business, talk to the Eber & Associates team. We’ll analyze your business’s risks and help you select an appropriate coverage limit. Then, we’ll get competitive quotes from reputable carriers so you can have the right protection at the right price.
Get your free quote on commercial umbrella insurance from our team today.