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Why are Commercial Umbrella Liability Premiums Spiking?

Umbrella liability pricing rose 21% in the second quarter of 2020. The increase may actually be much higher, 40-100%, for companies spending under $10 million per annually. In addition to the premium spikes, the available capacity for umbrella coverage has lowered, so it is now harder to find an underwriter willing to provide the amount of coverage your company may be used to.

Why are premiums rising now?

The answer is twofold. The first thing that’s going on is a concept known as social inflation. A claim 10 years ago for a slip and fall or an auto accident with injuries was settling out at one number. Today the settlement on those types of claims are much higher. There is considerable social pressure leading to jury award inflation. The second thing is auto accidents. Auto accidents are becoming much more expensive and, up until very recently a one million dollar primary auto limit was considered more than adequate for most auto accidents. That’s no longer the case.

How can companies reduce their umbrella liability premiums?

My firm, the MB Davis Group, looks for opportunities for businesses to restructure their assets and programs, especially as we continue to work through a global pandemic and economic slowdown, so you aren’t being charged to cover more than what’s necessary. Many of my clients are surprised at how small changes can lead to unexpectedly large savings in their insurance expenditures.

We see no signs of the trends in umbrella liability coverage stopping anytime soon, so the time to restructure your insurance program is now. Give me a call to find out how we can make insurance management a lot easier for your business.

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