What Is An Umbrella Insurance Policy?

When owning a franchise, it’s important to work with an insurance provider who truly understands all of the exposures your business should have covered. One major oversight many franchisors miss out on is Umbrella Insurance coverage. In the event of a loss and your underlying policies become exhausted, Umbrella Insurance stands behind your liability coverage with an extra layer of protection.

Experts at EZ CERT are here to help brands find the right coverage for their business -- Umbrella Insurance is a crucial recommendation. But why? Why would you want to spend additional cash on a monthly basis for a type of insurance you’ve never heard of before?

Doug Groves, principal at EZ CERT explained, “Umbrella Insurance is usually very affordable. The coverage is only used when the claim is so bad that it exhausts all the limits of the underlying policy, which is why it’s typically so inexpensive. We offer an Umbrella quote with every franchise business quote we write.”

The key to Umbrella Insurance is that it only comes into play when drastic events occur. Usually, large losses come from a negligence that was unforeseen. But, if your business has Umbrella Insurance, you can protect your balance sheet.

“If a franchisee has $5 million in assets on their balance sheet, they would want 5 million in Umbrella Insurance coverage,” explained Groves. “If a truly bad thing happens, the plaintiff attorney is going to go after the balance sheet, not the insurance. We want the insurance to defend the customer, without using their personal assets. If something catastrophic occurs, we don’t want the business owners’ assets to be more attractive than the insurance.”

It’s common for business owners to think that other excess policies are similar to Umbrella Insurance, but that’s not the case. Umbrella Insurance is broader coverage than any excess policy. An Umbrella policy normally can pick up losses excluded under the underlying insurance.

“If you only buy General Liability, Work Comp and Auto, Umbrella coverage can support you with additional limits in the event of a massive loss. It’s a very cost-effective way to buy higher limits for a business,” shared Groves.

Umbrella Insurance policies are so valuable, many franchisors are adding them as a mandatory clause in their Franchise Disclosure Agreements (FDD). In order to make sure all franchisees are following the insurance requirements outlined in the FDD, EZ CERT oversees all insurance certificates so franchisors don’t have to worry about overseeing compliance.

It’s important to remember adequate insurance can mean the difference between your business staying open or closing down. Working with the right insurance expert can ensure you’re receiving the proper coverage for your unique business. EZ CERT can manage and maintain these relationships so franchisors can focus on growing their franchise instead of being bogged down in insurance claims.

“Outsourcing your insurance compliance to EZ CERT can ensure all of your franchisees have proper insurance, are regularly renewing the current insurance policies and can save you big money in the long term,” shared Groves.

Click here to learn more about how EZ CERT can support your franchise. Click here to complete a short form that can connect you with an insurance professional who can help you manage your business insurance needs.