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Umbrella and Excess Liability Coverage for Multifamily Construction
Sometimes, standard policy limits are simply not enough. Find out why umbrella or excess liability coverage could be the right thing for your multifamily development.
Building multifamily housing comes with its share of risks. While standard insurance policies cover a lot, sometimes they're not enough by themselves. That's where umbrella and excess liability coverage can come in. These policies provide an extra layer of protection (yep, like an umbrella) when your primary insurance hits its limits.
What Are Umbrella and Excess Liability Policies?
Umbrella and excess liability policies are additional insurance that kick in when your primary policy's limits are exhausted. Although they're similar, there are some differences:
Umbrella policies typically offer broader coverage, potentially filling gaps in your primary policies. They might cover some claims not even included in your underlying policies.
Excess liability policies usually follow the terms of your primary policy exactly…just with higher limits. They don't expand coverage, but they do increase the amount of protection.
Why They Matter in Multifamily Construction
Multifamily construction projects are often extremely complex and high value. A single major incident could easily surpass the limits of a standard policy. For example, if a fire caused by faulty wiring destroys a nearly-completed building, or if a worker injury leads to a lawsuit exceeding your workers' comp limits, umbrella or excess coverage could save your business from financial ruin.
What These Policies Cover
Umbrella and excess liability policies typically cover:
- Bodily injury claims
- Property damage claims
- Personal and advertising injury claims
They can apply to various underlying policies, including general liability, employer's liability, and even commercial auto liability.
How They Work
Let's say you have a $2 million general liability policy and a $5 million umbrella policy. If you face a $3 million lawsuit, your general liability would cover the first $2 million, and your umbrella policy would cover the remaining $1 million.
Choosing the Right Coverage
When selecting umbrella or excess liability coverage for your multifamily construction project, consider:
The value of your project: Higher-value projects generally need more coverage.
Your risk exposure: Consider factors like project complexity, location, and your safety record.
Contractual requirements: Some contracts might require specific amounts of additional coverage.
Your financial situation: Balance the cost of premiums against your ability to handle potential losses.
Keep in mind that the cost of umbrella or excess liability insurance can vary widely, depending on a ton of different factors. Location, claim history, and property type are just three I can think of off the top of my head. But just because you've seen one price that made you recoil in shock, that doesn't mean all insurers will assess your property the same way.
Janover Insurance Group has access to thousands of insurance products. This means they can often find better coverage at lower costs, which is particularly valuable when you're looking for specialized policies like umbrella or excess liability coverage.
The Cost-Benefit Analysis
While umbrella and excess liability policies add to your insurance costs, they're often a bargain compared to the protection they offer. The premiums are usually much lower than your primary policies because they only kick in after other coverage is exhausted. Insurers see them as lower risk (because they are), and you get peace of mind. It's a decent trade off.
Working with Your Insurance Provider
When shopping for umbrella or excess liability coverage, work closely with your insurance provider. They can help you analyze your risks and determine the right amount of coverage. They'll also ensure that your umbrella or excess policy coordinates properly with your underlying policies to avoid coverage gaps.
Conclusion
In the high-stakes world of multifamily construction, umbrella and excess liability policies provide valuable peace of mind. They offer an extra buffer against large claims that could otherwise devastate your business. While they're an additional expense, the protection they offer can be well worth the cost.
Talk to us about whether umbrella or excess liability coverage makes sense for your multifamily construction project — it often will. With the right insurance stack, you can focus on building great housing, knowing you're protected if things go wrong.