Commercial Umbrella Policies are the insurance policies that have been the most affected by the hard market that we are currently facing. Eric explains more.
We are currently in a hard market, which means premiums are increasing and less coverage is being offered because less carriers are able or willing to provide quotes. The policy that has been taking the biggest hit is the Commercial Umbrella.
An Umbrella provides excess coverage over the General Liability, Directors & Officers Liability, Auto Liability, and Workers Compensation policies. The umbrella will kick in and provide coverage for anything over the occurrence limit on any of those policies, but it will not exceed the umbrella limit. Most Umbrellas maintained by condos or coops these days are written in Risk Purchasing Groups. In the 90’s, these programs were formed to provide higher limits and lower premiums for similar types of insureds. They are typically made up of multiple carriers to spread out the risk. Most insureds have been carrying $100M umbrella limits because it was the most cost-effective option when the policy was taken out. Unfortunately with the hard market, that is no longer the case and insureds are seeing lower umbrella limits for a higher premium than they were paying for their $100M limit. This is due to a number of factors but one of the larger factors is that jury awards are increasing because jurors are much more sympathetic than they used to be. As such insurance companies are seeing more and more lawsuits and judgments that are exceeding the $1M underlying limit and more claims are piercing the umbrella.
For this reason, these programs are looking to reduce their exposure while increasing their premium in some cases by as much as 400%! You need to decide what limit is most cost-effective for your association while still properly protecting your association as your renewal may contain quotes for half the expiring limit at a premium that is double the price. Sometimes the only option is to reduce coverage so that the premium is more affordable. Having amenities like a swimming pool or commercial occupants such as a daycare or house of worship will increase your exposure, so those associations may need higher umbrella limits.
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