Commercial Umbrella Insurance
Underlying Policy Requirements for Commercial Umbrella Insurance
Underlying Policy Requirements for Commercial Umbrella Insurance — everything contractors need to know about umbrella coverage.
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What Primary Coverage Your Umbrella Carrier Will Require
A commercial umbrella policy sits above your GL, commercial auto, and employers liability policies — extending your total liability protection beyond what any single policy can provide. For contractors facing large projects, high-value claims, and contract requirements, umbrella coverage is essential.
Minimum GL Requirements
Umbrella carriers typically require $1M per occurrence / $2M aggregate GL as the minimum underlying limit. Some carriers require $500K per occurrence as a minimum. If your GL is below the umbrella’s required minimum, you have an uninsured gap — a potentially catastrophic exposure.
Commercial Auto Requirements
For the umbrella to extend over commercial auto, you must maintain commercial auto liability at the carrier’s required minimum — typically $1M CSL. If you have no commercial auto policy or your auto limit is below the minimum, the umbrella won’t cover auto liability claims above that threshold.
Employers Liability Requirements
Workers compensation policies include employers liability at limits typically set at $100K/$500K/$100K or higher. The umbrella requires these to be maintained. For contractors in states with mandatory workers comp, maintaining WC automatically satisfies this requirement.
The Gap Risk of Dropping Underlying Limits
If you reduce your GL from $1M to $500K to save money — without checking your umbrella’s minimum required underlying limits — you may create a $500K uninsured gap between where GL ends and umbrella begins. This is a real and costly mistake contractors make when trying to reduce premiums.
Scheduled Underlying Policies
Your umbrella policy lists your underlying policies on a schedule. Keep this schedule accurate. Adding new underlying policies (a new commercial auto policy, for example) should be reported to your umbrella carrier so they can update the schedule and ensure seamless coverage coordination.