$5 Million Umbrella Insurance Policy For Contract Requirements - What To Know

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When you’re working with bigger entities, they’re usually thinking about risk management on a larger scale, which is why they may ask you to carry $5 million in umbrella liability coverage.

This isn’t unusual—having this level of coverage has become fairly standard practice in higher-risk industries or when you’re dealing with larger contracts. It protects them, but it also provides crucial protection for your business too.

Here are a few key reasons why this level of umbrella coverage is valuable.

First, it’s more affordable than you might expect when you consider the amount of coverage it provides. For the added security it brings, many businesses find it to be a smart investment.

Second, umbrella coverage often applies to multiple areas of liability—so not only does it satisfy the contract, it can also help cover claims in other areas of your business such as with general liability, commercial auto, workers comp, etc.

Third, if you don’t meet these coverage requirements, there’s a risk of losing out on a valuable business opportunity or partnership.

To give you an idea of real-world situations where this level of coverage could be needed.

One example, a construction company working on a large project experienced a major equipment malfunction, which led to severe injuries to multiple workers. The costs for medical expenses and legal claims quickly exceeded their standard coverage limits, and the $5 million umbrella policy helped cover those additional expenses, essentially saving the business from a financial disaster.

Another could be a business leasing commercial space accidentally caused a fire that damaged multiple neighboring businesses in the same building. The total claims from the impacted businesses went beyond the company’s general liability limits, and without a $5 million umbrella policy, they would have been responsible for those excess costs out of pocket.

If you’re looking to partner with larger businesses or simply want to ensure that your business is protected against potential high-cost claims, a $5 million umbrella policy is a smart move. It provides an extra layer of protection not just for one contract but for a wide range of scenarios.

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Timecodes
0:00 - Intro
1:00 - Why You Might Need a $5M Umbrella Policy
1:39 - Cost of a $5M Umbrella
1:47 - What a $5M Umbrella can provide coverage for
2:05 - Not having a $5M Umbrella could cost you future business opportunities
2:16 - Real life examples of when you would need a $5M Umbrella
3:21 - Summary of why a $5M Umbrella is important
3:49 - Closing

**DISCLAIMER: THIS IS NOT LEGAL ADVICE. USE AT YOUR OWN DISCRETION. THIS VIDEO INCLUDES MICHIGAN INFORMATION ONLY.