A couple years ago, the West Fertilizer Company exploded, killing 14 people, injuring 200 others and caused tens of millions of dollars in damage. And, it was just reported the general liability policy carried by the company only had the standard $1 million in coverage and no umbrella policy.
Unfortunately for the victims, this town, and the company itself is they only had $1 million to divide amongst all of the victims, which left most to pay for their injuries and property damage themselves.
While this is certainly an extreme example of the damage a company's negligence can cause, it does highlight the need for companies to carry additional limits of insurance with an umbrella policy. Umbrella policies provide additional limits of insurance after the general liability's limits are exhausted. (Unfortunately, in this case I don't know if the company or anyone could have foreseen purchasing limits high enough to cover the damages cause by this tragic event.)
For most small restoration contractors, we typically recommend purchasing at least $1 million umbrella policy, but there are cases where a $5 million, $10 million, or even a $20 million umbrella is the proper amount.
If you have any questions on whether or not your company should purchase an umbrella policy and the proper limits to buy, please contact our office.