(October 2025)
The AAIS Commercial Umbrella
Liability Coverage – CU 0002 – protects businesses from significant financial
losses due to large liability claims related to injury or property damage. The
same criteria are used for the Commercial Excess/Umbrella Liability Coverage –
CU 0001.
To qualify for an umbrella
policy, a business must have primary commercial liability coverage, such as premises/operations
and/or products/completed work, with AAIS or comparable forms.
Key factors for eligibility
include:
·
Underlying
Coverage Requirements
o
Current
liability limits must meet minimum umbrella requirements.
o
Underlying
automobile exposure must meet company guidelines since auto exposures are a crucial
element for eligibility requirements. This is especially necessary for high-risk
situations, such as large fleets, extra-heavy vehicles, or hazardous hauling operations.
o
Ensure the
underlying carrier meets the company’s required financial rating and claims
capacity.
o
Identify any
gaps between the underlying and umbrella coverages. If gaps exist, the underlying
or umbrella may need to be endorsed to align coverages.
·
Risk Profile
o
Identify the
industry and primary operations. The type of operation is important for risk
eligibility due to stricter guidelines for certain industries, such as construction
or manufacturing.
o
Identify any
other operational exposures, such as international exposures or hazardous
materials, since they may require special review.
o
Evaluate the
claims history. Depending on the claim history, be prepared to discuss past
claims or risk mitigation with the insured, as this may be important prior to
submitting the risk.
·
Financial
Stability
o
Considering
the company's assets, what is the required liability limit for the umbrella
policy?
o
It is
essential to ensure that the business can meet its premium payments and
retention limit requirements.
Ultimately, careful evaluation is
crucial to determining umbrella eligibility. Specialty insurance carriers may
be necessary for high-risk activities or significant auto exposures.
NOTE: It is always good to remember that each insurance company will set its
own criteria based on the specific types of risks it is
willing to underwrite.