What is the purpose of commercial umbrella insurance?

Commercial umbrella insurance serves the important function of providing additional liability coverage that extends beyond the limits of primary policies. In many business operations, having adequate liability protection is crucial, especially when faced with significant claims or lawsuits that could exceed the limits of standard liability insurance policies, such as general liability or employer's liability insurance.

For example, if a business is found liable for damages in an incident that costs more than the primary policy limit, the commercial umbrella insurance kicks in to cover the difference. This safeguard helps protect businesses from the financial repercussions of large settlements or judgments, ensuring they can continue to operate without devastating losses.

The other choices do not accurately represent the purpose of commercial umbrella insurance. It does not indiscriminately cover all types of property damage, nor does it focus solely on insuring personal assets of business owners or replace lost income from business interruptions. Each of those aspects falls under different kinds of policies or coverage within the commercial insurance landscape.