Bumbershoot Insurance: Cost & Quotes From $45/mo

As a business owner in the maritime industry, you may have difficulty anticipating when a catastrophic liability event may come your way. For example, you may own a marina, and the boats get damaged. A commercial general liability policy might not provide adequate coverage in such a case. The same problem applies if you tow boats and they get damaged during the trip.

One tool you have to protect your business from bankruptcy is bumbershoot insurance. The policy provides insurance protection for dry and wet incidents in the maritime industry by extending the coverage of underlying insurance policies. Keep reading to find out more about this vital insurance policy for your maritime business.

What is a Bumbershoot Insurance Policy?

The typical bumbershoot insurance definition is that this policy is an excess or umbrella liability protection for wet marine exposures. Bumbershoot liability insurance has several different non-marine and maritime liability protections it enhances:

Marine Protections

Most bumbershoot insurance policies add to the protection you would receive under an umbrella liability policy. Bumbershoot umbrella insurance fortifies protections for maritime-related liabilities, which include:

• Ship repairer's legal liability–Provides insurance protection for ship repairs causing damage to a vessel under repair or alteration

• Collision and salvage costs–Helps your maritime business cover costs related to marine collision accidents and the cost to salvage your vehicle from the water

• Tower’s liability–Allows insured to get protection for their operations where they tow third-party vessels in the water

• Vessel pollution liability–This covers your business for costs related to a vessel causing a pollution event, including cleaning it up

• Marine terminal operator's liability–Allows your maritime business to get covered for damage to cargo while your vessels are importing and exporting materials. The World Trade Organization estimated in 2019 that US exports accounted for 20% of all sea transport

• Protection & indemnity–This policy covers all maritime liability risks related to maritime vessel operation. Some exceptions to this protection include worker injuries and collision coverage

Non-Marine Protections

A bumbershoot umbrella policy can extend coverage for non-marine liabilities from a primary policy, including:

• Bodily injury liability–Protects your business against third-party claims of bodily injury from your products and services. This coverage is included in general liability insurance

• Personal injury liability–This policy will cover your business when sued for personal injury claims like copyright infringement

• Property damage liability–Covers any costs related to third-party property that your business damages

• Auto liability–Adds protection for liability associated with on-road vehicle collisions.

• Employers liability—This policy protects you from the costs of dealing with employee lawsuits resulting from workplace injuries

What Does Bumbershoot Insurance Not Cover?

There are different situations in which your bumbershoot policy will not cover you. See some of these situations below.

Your Business Building Gets Damaged

Bumbershoot insurance will not include protection against physical damage to your business property. You would need commercial property insurance or a business owner's policy to get that coverage. 

Commercial property insurance protects your business building from events like fire, theft, and weather. It will not cover everything, however. Certain events like floods and earthquakes will need separate coverage.

When Your Business Equipment Is Damaged or Stolen On Land

If your business has malfunctioning equipment or it gets stolen from your business, you would need insurance policies like commercial property, inland marine, or equipment breakdown insurance.

Inland marine insurance protects your tools and equipment when they are being transferred over the land and when they are used at job sites. Equipment breakdown covers specific causes of damage that are usually excluded, like mechanical failure or electronic shortage.

Employee Theft of Client Property or Business Property

Suppose one of your employees steals client property or commits other acts of commercial crime. In that case, you will need employee dishonesty protection to cover the financial losses you experience. Employee dishonesty coverage typically includes fidelity bonds that reimburse you when your employee embezzles money, forgers signatures, and steals property.

Some clients may require employee bond protection before they do business with you so that their assets are protected. Employees may access client financial data, social security numbers, credit card data, and identifying information like addresses.

Any Damage That Does Not Exceed A Primary Policy Limit

Since bumbershoot insurance is an excess policy, it will only kick in when an underlying policy that it covers has reached its policy limits. You will want to pay attention to how much your claim costs to know when your bumbershoot policy will kick in.

Professional Mistakes

Mistakes and oversights in your professional business operations are not covered by general liability insurance or other similar policies that bumbershoot insurance can enhance. 

Instead, you will need coverage from a policy called professional liability insurance. This policy will cover missed deadlines, undelivered cargo, and negligence in your business operations if you get sued by a client.

While bumbershoot insurance does not cover these events, you can get an excess liability insurance policy to boost professional liability insurance limits. This policy is sometimes called professional indemnity insurance and errors and omissions insurance.

Which Businesses Need Bumbershoot Insurance?

Usually, businesses that interact with the sea and the maritime industry are prime candidates for bumbershoot insurance. 

Shipyards

Shipyards occupy large property areas and are concentrated on repairing, constructing, and refurbishing marine vessels. They would want bumbershoot insurance to better protect them from liability claims.

Marinas

Marinas are responsible for storing and safekeeping their customer's marine vessels throughout the year. They can also offer services that benefit from bumbershoot insurance coverage, like boat rental and boat maintenance. 

International Freight Shippers

An international freight business is responsible for transporting goods and their safety until they reach their destination. This business would want coverage for the cost of broken items during the journey and collision coverage for their vessels as they head into international waters.

Charter Vessels

Charter vessel businesses are responsible for transporting pay customers on tours to explore various points and places of interest. They would want coverage to protect themselves from third-party liability and other indemnity costs related to the marine vessels they use.

Boat Towing Services

Any marine business offering boat towing services would significantly benefit from the extended coverage of bumbershoot insurance. Tower’s legal liability would protect your business from the potential risks of towing another vessel, like accidentally causing a customer’s vehicle damage when it is under your care.

How Much Coverage Does My Business Need?

Your bumbershoot insurance policy needs will vary based on your business type and situation. For example, some businesses purchase bumbershoot to help fulfill contracts that require $2 million or more limits. Usually, umbrella bumbershoot insurance comes in $1 million increments, so you can purchase the exact coverage you need for an event like a lawsuit.

Can I Buy Bumbershoot Insurance Without Having Another Insurance Policy?

No. Since bumbershoot is an excess policy, you need to have an existing policy for it to enhance. You can endorse bumbershoot insurance to the following policies:

General Liability Insurance

This policy will cover third-party property damage, bodily injury, and personal injury like copyright infringement. General liability insurance will have a typical coverage limit between $1 million and $2 million and covers incidents that include:

Commercial Auto Insurance

Commercial auto policies cover your land-based business vehicles when they get into accidents on the road with other vehicles. You get coverage when your vehicles are performing business-related activities for liability claims, damage from collisions, and damage to your vehicles from other sources. 

Without a compatible policy, you cannot buy bumbershoot insurance. One example of incompatible insurance is commercial property insurance. Bumbershoot insurance typically won’t boost the limits of commercial property insurance.

Coverage Limits of Bumbershoot Insurance

Depending on your insurer, a bumbershoot policy will have excess coverage limits of up to $100 million. This limit influences the price of your policy. Other factors affecting price are your payroll size and business location.

What is Self-insured Retention?

Self-insured retention is the dollar amount you agree upon with your insurer that must be paid before your insurance policy will cover defense and indemnity. Before the self-insured retention dollar amount is hit, the policyholder can handle claims as they see fit. After the limit is hit, the insurer takes over.

This provision stands in contrast to a deductible policy. Insurance policies with a deductible will let the insurance company handle the claims themselves. Then the insurer seeks compensation for the deductible amount from the insurance holder.

Bumbershoot Insurance Cost

The average bumbershoot insurance cost is $84 per month or $1,008  per year for a $1 million worth of coverage. Factors that affect premiums are revenues, location, business history, and claims history. Here’s a table showing the cost of a $5 million bumbershoot insurance from the best companies: