How Much Excess Liability Insurance Do Manufacturers Need?
Having adequate liability insurance is crucial in the manufacturing industry. However, sometimes general liability insurance might not be enough to keep your business protected. Enter excess liability insurance.
Excess liability insurance is coverage provided for significant unexpected events that can have potentially catastrophic results on your business, ranging from auto accidents to product liability claims.
Excess liability insurance provides just that – excess coverage limits in addition to the underlying liability policy. This additional coverage can be the difference in protecting your business from bankruptcy.
Read on to learn what excess liability insurance covers, who needs it, and how to know how much coverage you need.
What Does Excess Liability Insurance Cover?
An excess liability insurance policy, also known as excess liability coverage, provides financial protection and higher policy limits if a claim is made that exceeds the limit of an underlying liability policy.
In simple terms, excess liability insurance provides additional coverage on top of your existing policy.
For example, let’s say you have a $1 million general liability insurance policy and face a $1.75 million claim. You and your business would have to cover the $750,000 that exceeds your general liability limits.
However, if you had an excess liability policy of $1 million on top of your general liability insurance, your excess liability coverage would cover that $750,000 loss. This would keep you financially protected.
Who Needs Excess Liability Insurance?
Excess liability insurance protects your business from significant losses and reduces the chance that a lawsuit could bankrupt your business.
Many business owners choose to have excess liability coverage because they face substantial risks, such as:
- A high degree of foot traffic
- The handling or transportation of hazardous materials
- The personal injury claims that could be leveled against construction, manufacturing, or similar businesses
Why Do Many Manufacturers Opt for Excess Liability Insurance?
Many manufacturers use excess liability insurance as a cost-effective way to increase the limits on their underlying coverage since they may face higher risks than other industries.
These policies boost coverage on general liability insurance and can help to ensure protection in the event of a claim.
How Much Excess Liability Do Manufacturers Need?
When determining how much additional coverage manufacturers need, professionals may consider several factors. These factors can include:
- whether a firm has experience with prior large losses
- what is typical for their industry
- whether anything has changed in their business that might affect their risk exposure
As an industry, manufacturers tend to buy higher excess casualty limits than other industries. Each business has different needs and there is no one-size-fits-all answer to how much coverage a business needs.
However, working with a broker and considering these factors can help you make an informed decision about your coverage to ensure you and your business are protected.
Other Important Policies for Manufacturers
While general liability insurance covers many common risks, it does not provide complete protection. For example, manufacturers should also consider:
General Liability Insurance
General liability insurance can help to protect a manufacturing company’s income and assets against everyday risks.
For example, general liability insurance can help cover:
- Medical payments if another person or party is injured on your commercial property.*
- Property damage if your business or employees cause damage to another person’s property.
- Advertising injuries if your business is sued for copyright infringement in your advertisement.
- Bodily injury claims if someone is injured at the site of business.
- Reputational harm if you face a lawsuit for libel, malicious prosecution, slander, privacy, or wrongful eviction.
Workers’ Compensation Insurance
Workers’ compensation is built on an exchange between employers and employees. In the case of a work-related injury or illness, employees are entitled to effective medical treatment coverage while in return, employers are protected from legal action resulting from those injuries.
A workers’ compensation insurance policy provides:
- Coverage for the costs of medical treatment, and
- Lost time or indemnity benefits
Business Owner’s Policy
A BOP bundles general liability insurance with commercial property insurance. This bundle is often at a lower rate than if the policies were purchased separately.
Commercial Umbrella Insurance
Similar to excess liability insurance, this policy boosts coverage on a manufacturer’s general liability, employer’s liability, or commercial auto insurance policy once the limit is reached.
Apex brings the high-touch service proposition back to San Diego businesses and beyond.
At Apex Risk & Insurance Services, we want you to know and understand your options. We prioritize transparency and provide custom solutions to meet your insurance needs. Then, read on to learn more about the difference between professional liability insurance and errors and omissions (E&O) insurance.