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Commercial insurance is high up on the list for business owners when it comes to protecting their finances. However, many business owners obtain the basic coverage needed to hopefully keep their business afloat after a loss, and they often overlook valuable commercial lines insurance programs such as excess coverage insurance.
Excess coverage is exactly what it sounds like; it essentially increases the policy limits over and above those of the primary commercial insurance policy, for loss or damages caused by specific hazards specified in the primary policy. Excess coverage acts as a secondary line of defense behind a business’s underlying insurance coverage that kicks in when the primary policy limits have been exhausted and can also serve as a way to cover gaps in between insurance coverage and contractual requirements.
Extra Cost or Cost-Saving Tool?
While excess coverage is often seen as an unnecessary extra cost, it can actually serve as quite the opposite. Raising the limits of an individual commercial general liability policy can significantly increase the associated premiums. Instead, a business owner can purchase excess coverage, typically in increments of $1 million, for a few hundred dollars extra each year. And while it is indeed an extra cost, it can potentially save a business owner from having to pay hundreds of thousands of dollars out of pocket after an especially costly loss. With liability cases settling in the millions of dollars more and more often, excess coverage can be a great cost-saving tool for business owners.
Who Benefits from Excess Coverage?
Excess coverage is completely optional, but it is still a valuable option for business owners of all types. Obtaining excess coverage can also be attractive to potential clients in certain situations. The types of businesses that may benefit from commercial excess insurance include, but are not limited to:
- Businesses that serve high net-worth clients.
- Businesses with clients that require or request higher liability limits.
- Businesses with contracts that require unusually high liability coverage.
- Businesses that have considerable liability exposures.
- Businesses that have a history of prior liability losses.
- Businesses that are unable afford to liability cases that reach the $1 million or more.
When it comes down to it, even the best commercial liability policies have their limitations. Excess coverage is a simple a customizable way for business owners to protect themselves from a major loss beyond the limits that any basic policy can offer them so that they can remain profitable and avoid the financial setbacks that can come with an especially costly liability event.
About Mavon Insurance
At Mavon Insurance, we pride ourselves on our unique approach to insurance. We focus on integrity, communication, professionalism, respect and gratitude to help our clients succeed and place business in specialized markets. For more information about our products or to become an agent, please contact us today at (855) 248-1480.