What Umbrella Insurance Does
An umbrella policy sits above your primary liability policies and responds when a claim exhausts your underlying limits. Think of it as a backup layer: your general liability policy pays up to $1 million, and then your umbrella takes over for everything beyond that — up to the umbrella limit.
"Follow-form" is the key term to understand. A properly structured umbrella follows the terms of your underlying policies — it covers the same types of claims, with the same exclusions. Once the underlying limits are exhausted, the umbrella takes over without gaps. Ask your agent to confirm your umbrella is follow-form and that all your underlying policies are properly scheduled on it.
When Your Primary Limits Aren't Enough
Tree care companies work near some of the most expensive assets their clients own. A 90-year-old oak next to a $1.2 million home. Power lines over a busy commercial street. A large removal over a neighbor's attached garage. The liability exposure in these situations can easily reach — and exceed — a $1 million GL limit in a single incident.
Consider a scenario where a tree being removed drops across three vehicles in a neighbor's driveway, damaging all three, injuring a pedestrian, and knocking out power to a commercial building for two days. The resulting property damage, bodily injury, and business interruption claim could produce a seven-figure loss. A $1 million GL policy would be exhausted quickly. Without an umbrella, the excess comes out of the business — or out of your personal assets.
An umbrella with a $2 million limit typically costs a fraction of what the underlying GL costs. For the amount of protection it adds, umbrella is one of the best-value policies available to a tree care business.
Contract Requirements
Beyond protection from catastrophic losses, umbrella coverage is often required by contract. Here's what tree care companies commonly encounter:
- Municipalities and government agencies typically require $2M to $5M in combined liability limits for any contractor working in public right-of-way.
- Commercial property managers and HOAs increasingly require $2M per occurrence as a minimum before approving any tree work on managed properties.
- Utility line clearance contracts often specify $5M or higher in combined liability limits and may require the umbrella to be listed as a named additional insured.
- Large residential clients — particularly in high-value areas — may ask for certificates showing $2M in limits before allowing work to begin.
Having an umbrella in place means you can meet these requirements without restructuring your entire insurance program every time a new contract comes up.