Some professionals in the entertainment industry may unsure what an umbrella policy is or what it covers. I will explain the basics of Umbrella or Excess Liability Insurance and the benefits to your company.
When you are outside and there is a light rain or breeze you generally don’t need or want an umbrella. However, if it is pouring down rain with high winds, you take your umbrella. An Umbrella Insurance policy works much the same way.
Umbrella Insurance provides extra protection or limits above the liability insurance you currently have. An Umbrella Insurance policy protects you from losing the entirety of your resources and assets in the event of a large claim. Umbrella Insurance provides limits above your primary commercial insurance program.
Here is an example: A production company leased a studio for the filming of commercials. During filming, part of the rigging fell on an employee of one of the advertisers causing major injuries. The employee’s medical expenses were $750,000 plus an additional $200,000 for two years of lost work. The production company had a primary commercial liability policy with limits of $500,000 but also had an Umbrella with a limit of $1,000,000. The Umbrella policy covered the excess $450,000 of the claim.
It is true that Umbrella Insurance may not be for every firm, but if you are building financial resources for your company’s future, Umbrella coverage needs to be part of the plan.