Umbrella Liability Insurance for Flooring Contractors

An umbrella liability policy is one policy written over the top of your other liability policies. When a serious claim uses up the limit on your general liability, your commercial auto liability or your employers liability, the umbrella is the layer that keeps paying. It can also answer some claims those policies never covered at all, under the standard ISO form as commonly written.

For a flooring business, this is the policy that stands between a very large claim and the business itself: a loaded van in a bad crash, or a finished floor tied to a serious fall. Commercial contracts also assume you carry it, because the liability they ask for often runs past what a primary policy is built to hold.

What an umbrella sits over, and what it leaves alone

The umbrella, under the standard ISO form as commonly written — the Commercial Liability Umbrella Coverage Form, CU 00 01 04 13 — pays for bodily injury and property damage above a retained limit. It also takes on the defense of a suit once the underlying policies are used up, or where they do not provide coverage in the first place. The underlying policies are the ones listed on the umbrella’s declarations. Many umbrella writers use their own forms rather than the ISO wording, so the policy you hold decides the answer, not a general description.

On a flooring contractor’s account, the umbrella is generally about:

• injury or damage claims that exhaust your general liability, during the job or after the floor is finished;
• auto liability from your vans and trucks once the commercial auto limit is used up;
• an injured employee’s lawsuit, above the employers liability part of your workers compensation policy;
• the cost of defending a suit once the umbrella is the policy responding.

What it generally leaves alone:

• workers compensation benefits themselves, which the form excludes as an obligation under a workers compensation law;
• damage to your own van, uninsured or underinsured motorist coverage, and no-fault benefits;
• an exposure an underlying policy carries under a sublimit, unless that sublimit is listed on the umbrella’s schedule;

1. An excess layer, where one is added

   More limit above the umbrella, following the terms of the policy beneath it

2. The umbrella

   One policy over the whole schedule; it pays once an underlying limit is used up

3. General liability

   Injury and damage from your work, while the job runs and after the floor is down

4. Commercial auto liability

   Injury and damage your vans and trucks cause to others on the road

5. Employers liability

   The part of the workers compensation policy that answers an employee’s lawsuit

A stack of layers, read from the top down. At the top is an optional excess layer, which adds more limit above the umbrella and follows the terms of the policy beneath it. Below that is the umbrella, one policy over the whole schedule, which pays once an underlying limit is used up and can answer some claims the primary policies do not cover. At the base are the primary policies listed on the umbrella’s schedule: general liability for injury and damage from your work, commercial auto liability for your vans and trucks, and employers liability, the part of the workers compensation policy that answers an injured employee’s lawsuit. Each primary policy answers first, up to its own limit. Workers compensation benefits and damage to your own van sit outside the stack. The wording of your own policy decides any real claim. No figures are shown.

How the umbrella stacks over your flooring policies

Think of the business’s liability protection as the floors of a building. The ground floor holds the primary policies: general liability for injury and damage from your work, commercial auto for the vans, and employers liability, which rides inside the workers compensation policy and answers when an injured employee’s claim becomes a lawsuit. The umbrella is the floor above all of them at once. It replaces none of them; each still answers first, up to its own limit, and the umbrella waits for that limit to be used up.

Rather than buying a higher limit on every primary policy, the business carries one umbrella over the whole schedule, and a large claim from any of those lines can reach it. Under the ISO form as written, the umbrella’s aggregate limit applies to injury and damage claims generally but not to claims arising from covered autos, so a van accident does not wear down the aggregate a completed-work claim would draw on.

Umbrella or follow-form excess: not the same promise

People use the words umbrella and excess as though they meant the same thing. On the ISO forms they do not. An umbrella written on CU 00 01 04 13 carries its own insuring agreement, definitions and exclusions. Because of that, it can respond where the underlying policy does not cover a claim at all, as long as the umbrella’s own terms reach it. In that case the business first pays a self-insured retention, an amount set on the declarations. When the underlying policy did cover the claim and its limits are simply used up, no retention applies; the umbrella picks up above the exhausted limit.

A follow-form excess policy works on a narrower idea, and under the standard ISO form as commonly written — the Commercial Excess Liability Coverage Form, CX 00 01 04 13 — it follows the terms of the underlying policy it sits over and is no broader than that policy. Its job is to add limit, not to add coverage, and it takes on the defense only once the underlying limits are exhausted. If the primary policy does not cover a claim, the excess policy does not either.

Titles are not a reliable guide: a policy called an umbrella can read like excess, and the reverse happens too. Reading the form, with every endorsement attached to it, is how you learn which promise you bought.

Umbrella form

• Carries its own terms

  Its own insuring agreement, definitions and exclusions, apart from the primary policy

• Can answer where the underlying does not

  Some claims the primary policy never covered, after a self-insured retention you pay

• Picks up once underlying limits are used up

  No retention applies when the primary policy covered the claim

Follow-form excess form

• Follows the policy beneath it

  Takes on the underlying policy’s terms and is no broader than it

• Silent where the underlying is silent

  A claim the primary policy does not cover stays uncovered

• Responds only after exhaustion

  Adds limit and defends once the underlying limits are used up

A two-column comparison. The first column holds the umbrella form: it carries its own insuring agreement, definitions and exclusions; it can answer some claims the underlying policy never covered, after the business pays a self-insured retention; and it picks up above the underlying policy once that policy’s limits are used up, with no retention in that case. The second column holds the follow-form excess form: it follows the terms of the policy beneath it and is no broader; a claim the underlying policy does not cover stays uncovered; and it adds limit and takes on the defense only after the underlying limits are exhausted. Policy titles are not a reliable guide, so the form itself decides which promise was bought. The wording of your own policy decides any real claim. No figures are shown.

Why general contractors write umbrella limits into the contract

Commercial work is where most flooring contractors first meet the umbrella. A general contractor, a property manager or a building owner sets insurance requirements in the subcontract, and the limits they ask for often run beyond what a primary policy is built to carry. The umbrella is how a flooring business meets them.

The same contracts usually ask to be named as an additional insured. Under the ISO umbrella form, a party that is an additional insured on your underlying policy becomes an insured on the umbrella as well, but only up to the amount the contract requires, less what the underlying policies pay. The contract, not the umbrella’s full limit, sets how far that protection reaches.

Other contract terms deserve a slow read. Some contracts demand that the umbrella be no narrower than the primary policy, which is hard to meet literally, because umbrellas do not carry things such as uninsured motorist or medical payments coverage. Others demand primary and noncontributory wording, while a typical umbrella is written to sit excess over other insurance. A higher limit solves neither; matching the umbrella’s wording to the contract before you sign does.

If you are still weighing whether your company needs an umbrella at all, our post on when a flooring company should carry an umbrella policy walks through the decision.

Keeping the policies under your umbrella in force

The umbrella depends on the policies beneath it, and the form expects you to keep them in place. A condition in the ISO umbrella form requires the underlying policies to stay in full effect. Letting one lapse does not cancel the umbrella, but the umbrella then responds as though the lapsed policy were still in force. The stretch between where the underlying limit should have been and where the umbrella begins is paid by the business.

An auto policy that drops at renewal or a general liability limit lowered to save premium can each open a hole under the umbrella. Let us know before any underlying policy changes, and we check the schedule against it.

Flooring losses that can climb into the umbrella

Only the large claims reach an umbrella. These categories describe their general shape; a real claim turns on its facts and on the wording of every policy in the stack.

• A loaded van in a serious crash. A crew van carrying rolls, pallets of tile, adhesives and tools is heavy, and an accident that injures other drivers or pedestrians can use up the commercial auto liability limit. The umbrella answers above it for the liability, never for the van.
• A completed floor tied to a serious fall. A lifted seam or failed transition in an office, a clinic or a multi-unit building can bring an injury claim long after the job, large enough to reach the completed-operations limit on your general liability. The umbrella’s definition of completed work mirrors the general liability form’s.
• An injured worker’s suit that comes back around. An employee hurt on a general contractor’s site sues the contractor, and the claim is brought back to your business under the subcontract; that runs through employers liability and then the umbrella.

Installers you bring in belong on this list too. Work done on your behalf counts as your work under the umbrella form, just as it does under general liability, so a completed-work claim from an installer’s job climbs through your general liability into your umbrella. The certificate discipline described in the 1099 installer section of the general liability page protects the umbrella as well: an underinsured installer’s claim can end up eroding your limits.

Umbrella limits, retentions and the order of the layers

An umbrella carries an each-occurrence limit and an aggregate limit, and its declarations set the self-insured retention for claims the underlying policies do not cover. The umbrella’s schedule also lists the limit each underlying policy must carry, and the umbrella attaches above them. None of those amounts is standard. Contracts usually set the floor, and the size of your jobs and the vans you keep on the road shape the rest.

We set umbrella limits by working up from the contracts you sign and the policies you already hold. Where one umbrella is not tall enough, an excess layer can go above it, and each layer’s terms have to line up with the one below.

Why place your umbrella with Flooring Business Insurance

An umbrella is only as sound as its fit with the policies underneath, and that fit is easiest to get right when one agency sees the whole stack. As an independent agency, we can place the general liability, commercial auto, workers compensation and umbrella together, with markets that write flooring work, and check each renewal so the schedule and the underlying limits still match. When a general contractor’s insurance requirements arrive, a licensed agent reads them against the umbrella’s wording, not just its limit.