In one sentence
Excess liability coverage sitting above primary policies, providing an additional layer of protection.
The longer version
Umbrella coverage raises the liability ceiling above the primary policies, and lenders often require a minimum combined limit. It is part of confirming the borrower's overall liability protection is adequate.
The umbrella's limits and that it properly sits above the underlying policies are review points in the insurance package.
Common questions
- What is an umbrella insurance policy?
- Excess liability coverage that sits above primary liability policies and pays once their limits are exhausted.
- Why do lenders require umbrella coverage?
- Because a large liability claim at the property could exceed primary limits and threaten the borrower's ability to keep the property operating and the loan current.
- How are umbrella limits set?
- By the lender's insurance requirements, usually scaled to property type, size and risk.
Keep reading
- The due diligence checklist, built to be runChecklists as systems, not documents.
- The commercial loan closing checklistWhat goes on the list and who owns each line.
- The post-closing audit trailWhat examiners ask for and how to have it ready.
- Commercial loan softwareWhere this sits in the lending stack.