Umbrella policies provide additional coverage for your security or investigation firm when the limits of your primary liability policies are exhausted.
For example, recently in the Pacific Northwest, a prominent security firm was awarded a contract to patrol a large office complex that had three separate buildings. The post orders required two security officers be posted in the main building after hours where all visitors were required to check in. One of the officers was also required to make rounds in the parking lot every 30 minutes to observe and report on the entire complex. On one particular evening an electrical fire erupted in one of the auxiliary buildings. According to reports the security officers ignored the local alarms. By the time the fire department was notified an entire floor was engulfed in flames. This loss totaled $3,500,000! Subsequently, a jury found this security firm liable for damages in excess of $2,000,000 due to inadequate security and inadequate training and supervision. This firm’s general liability policy responded, the security company was defended, and the limits of the policy were exhausted at $1,000,000.
Because they had an additional umbrella policy, the remainder of the loss was covered and paid for. Had this firm not had umbrella or excess coverage, the portion of this judgment in excess of the primary policy’s limit would have come out of pocket. Lesson learned.
Our society’s litigious nature, coupled with precedent setting liability awards, is the key factor in an ever-increasing necessity for umbrella liability insurance. The threat is real and the protection is needed now more that ever.
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