Risky business: How much is enough when it comes to excess limits?
Despite your best efforts to know and control your exposure to loss, you can be sued. The numbers of law suits filed against companies are rising. Not surprising the size of the settlements are also on the rise. Lawsuits can occur from the most surprising places; an existing contract, a marketing strategy, a company owned automobile, your business activities and your premises.
How much umbrella or excess limits should a business carry? There is no standard formula to answer this question, because the answer is different for every customer based on a number of variables of their business.
Umbrellas and Excess policies are important because they give you additional (higher) limits on multiple policies by purchasing one policy. Most cover General Liability, Automobile, and the Employers’ Liability part of Workers’ Compensation Insurance.
As a guide a company should do an analysis up front on what limits to carry. Protecting your company’s assets or net worth is the focus. Your insurance broker can assist you through the process by providing benchmarking information that shows you what your peer companies in your industry group are buying for limits.
Do not overlook what your contractual obligations might be. Your liability is indicated within the terms of the contract and you will be held responsible to comply with those contractual obligations.
When your analysis is complete, sit down with your broker and review. Whatever you do, take the time to properly protect your company. Don’t let the unexpected risks take your business down.
About the Author
David Bardelli is a Senior Vice President and the Casualty Practice Leader for WGA. David has extensive knowledge with casualty risks, including technology healthcare, business services and miscellaneous manufacturing groups of all sizes.