Homeowner Associations » Commercial Umbrella

Introduction to Commercial Umbrella, Excess Liability Insurance

A Commercial Umbrella (also referred to as an “excess liability policy”) provides catastrophic coverage for large liability claims which exceed your underlying liability insurance – or, in some cases, to provide an effective replacement for underlying liability policies which become reduced or exhausted by loss. While umbrella can be written in increments of $1,000,000, $2,000,000, $3,000,000, $5,000,000, $10,000,000, $15,000,000, $25,000,000 (up to $250,000,000), minimum limits of $5,000,000 are recommended.


In 2002, 1.5 million lawsuits were filed in California [Source: 2003 Court Statistics Report by the Judicial Council of California] It seems that nearly any one who is injured now seeks a “responsible party” (or, if not responsible, at least a deep pocket) for the potential of a high-dollar settlement.

Are homeowners association a likely target of such litigation? Absolutely. The courts see homeowners associations as corporations (albeit non-profit) with millions of dollars of assets, and have held the Association culpable for injuries and property damage related to maintenance of the common area. For years, Boards of Directors of homeowners associations have been strongly advised to purchase additional liability protection. Because of the broad coverage and relatively low cost, this additional liability coverage is often not purchased on the underlying general liability policy or Directors & Officers Liability coverage, but rather in the form of an “excess” policy, called a commercial umbrella.


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