Does Your Business Need an Umbrella Policy?

Understanding Commercial Umbrella Insurance

If you own a business in Tennessee, you’ve likely heard about commercial umbrella insurance. But do you really need it? The short answer: yes, especially if you want to safeguard your assets from unexpected lawsuits and major claims.

Think of commercial umbrella insurance like an actual umbrella on a stormy day—it provides an extra layer of protection when your primary insurance policies reach their limits. Without it, a large claim could put your business and personal finances at serious risk.

What Is Excess Liability Coverage?

Excess liability coverage, also known as a commercial umbrella policy, acts as a safety net for your business when standard liability insurance isn’t enough. Here’s how it works:

✅ A customer or employee files a lawsuit against your company.
✅ Your general liability insurance or commercial auto insurance covers the initial claim—up to its policy limit.
✅ If the claim exceeds your policy’s limit, your umbrella policy kicks in to cover the rest.

Without excess liability insurance, your business could be forced to pay out-of-pocket for high-dollar legal settlements, property damages, or medical bills.

Tennessee-Specific Insurance Considerations

In Tennessee, business owners need to be aware of specific laws and regulations regarding liability insurance:

• Tennessee does not require businesses to carry commercial umbrella insurance, but many contracts and leases may demand higher liability coverage than standard policies provide.

• Large jury verdicts are becoming more common in Tennessee courts, and even small businesses are at risk of lawsuits exceeding $1 million.

• Tennessee’s uninsured motorist laws mean that some business owners might need special endorsements to ensure their umbrella policy covers certain auto-related claims.

Why Tennessee Business Owners Need Extra Coverage

Many business owners assume that their existing liability insurance is enough. However, if a major claim arises, a commercial umbrella policy can mean the difference between staying in business or facing financial ruin.

Industries at Higher Risk in Tennessee:

• Restaurants & Hospitality – Slip-and-fall injuries, foodborne illness claims, and alcohol-related liabilities.

• Trucking & Logistics – Accidents on I-40, I-65, or I-75 could result in multi-million dollar claims.

• Construction & Contracting – On-site injuries and property damage claims often exceed primary liability limits.

• Retail & Small Business Owners – Customer injuries, product liability claims, and defamation lawsuits.

Real-Life Example:

Imagine you own a catering business in Nashville. One day, a customer claims that food poisoning from your service led to a $750,000 medical bill and lost wages. Your general liability policy only covers $500,000. Without umbrella insurance, you’d be responsible for paying the remaining $250,000 out-of-pocket.

What Does an Umbrella Policy Cover?

A Tennessee business umbrella policy provides additional coverage for:

1. Bodily Injury Liability

Covers medical bills and legal expenses if someone gets injured at your place of business or due to your operations.

2. Property Damage Liability

Covers damages caused to another person’s property due to your business activities.

3. Commercial Auto Liability

Expands coverage for company-owned vehicles and employees driving for work-related purposes.

4. Lawsuits & Legal Fees

Covers attorney costs, court fees, and settlement amounts if your business is sued.

5. Employee-Related Lawsuits

Protects against claims of wrongful termination, discrimination, and workplace harassment.

How Much Does an Umbrella Policy Cost in Tennessee?

The cost of a commercial umbrella policy varies based on factors such as:

💰 Industry Risk Level – Higher-risk businesses (construction, trucking) pay more.
💰 Annual Revenue – Larger businesses with more exposure will have higher premiums.
💰 Number of Employees – More employees mean more liability risks.
💰 Existing Policy Limits – Higher underlying coverage limits may reduce your umbrella policy cost.

On average, Tennessee business owners pay between $500 and $3,000 per year for a $1 million umbrella policy. The peace of mind it provides is well worth the investment.

How to Choose the Right Umbrella Policy in Tennessee

✅ 1. Assess Your Business Risks

Do you operate in a high-liability industry? Do you host customers on your premises? If so, umbrella coverage is a smart investment.

✅ 2. Check Your Existing Insurance Limits

Many umbrella policies require you to carry a minimum of $1 million in general liability coverage before adding excess coverage.

✅ 3. Work with a Local Insurance Expert

A Tennessee-based insurance agent understands the unique risks and legal requirements that affect business owners in the state.

Why Choose Hutsenpiller Insurance?

At Hutsenpiller Insurance, we specialize in helping Tennessee business owners get the right amount of coverage without overpaying. Our team:

✔ Works with multiple top-rated insurance carriers to find you the best deal.
✔ Provides personalized guidance based on your industry and specific business needs.
✔ Offers bundled insurance solutions to maximize savings and protection.

Don’t wait until it’s too late. Protect your business with a Tennessee commercial umbrella policy now. Call us at 615-773-2886 or click below to get started.