Umbrella Policy

Just like its counterpart in personal lines -- a business umbrella policy provides coverage for losses above the limit of an underlying policy. It applies to losses over a large dollar amount, but terms of coverage are sometimes broader.

Because the umbrella policy goes into effect after the underlying coverage is exhausted, there are certain limits that usually must be met in order to purchase this coverage. Most insurers will want you to have about $250,000 of liability insurance on your business auto policy and $300,000 of liability insurance on your business owner's policy before selling you an umbrella liability policy for additional coverage -- usually in increments of $1 million.