When The Sky Isn’t Always The Limit: What Commercial Umbrella Limits Should Be Carried

Any Community Association Board of Directors or Landlord who reads the news, knows how times keep changing and that society becomes more and more litigious with each passing year. In fact, the five most litigious states are New York, New Jersey, Florida, Texas, and California, where a simple (or not so simple) slip-and-fall, an assault in a building, or a burn from a defectively installed hot water system can end in a courtroom settlement of millions of dollars! Without a commercial umbrella to pay the damages above $1,000,000, the community association or landlord could be bankrupt—and/or lead to huge assessments to the owners of a community association, and more lawsuits by the owners of why the Board of Directors of the Association did not protect the community association properly.

And that’s where a commercial umbrella policy tailored for your condo/co-op association or apartment building comes in to provide protection over and above the limits of the existing policies, general liability and board of directors policies. It’s not a legal requirement, but the benefits of having it are substantial, as you can see in the examples below. 

When it comes to figuring out what limits should be carried by a community association or landlord, it basically boils down to risk tolerance. Umbrella limits start at $1,000,000 and can go up to $100,000,000, with usual choices of $5M, $10M, $25M, $50M or $100M available through specialty programs like ours in New Empire Insurance Services.

5 Examples of Real Commercial Umbrella Claims and Settlements:


1.   A child suffered severe burns from hot water that remained as scars into adulthood when his landlord failed to install a proper hot water system. He was awarded approximately $9,500,000.


2.   A man suffered severe head injuries following an assault in the lobby of his building through alleged negligent security. He was awarded $2,300,000.


3.   A man walks out of his cooperative building into a snowy day, and while coming down a few steps to the sidewalk, slips and falls backwards, hitting and breaking his neck on one of the steps. He becomes a quadriplegic. The cooperative association was sued for $50,000,000 for negligence, and the case was settled for $9,000,000. The first $1,000,000 was paid by the cooperative association’s general liability insurance and the next $8,000,000 was paid by the commercial umbrella that the cooperative maintained.


4.   A day-worker was working on a ladder approximately 13 feet above the ground while he was waterproofing the outside of a cooperative apartment building. He fell off the ladder, breaking his ankle and damaging his back. After numerous surgeries that documented his pain and suffering and inability to work, his lawsuit was settled for $3,500,000 after it had gone to a jury of six. The judge polled the jurors as to how they voted: four jurors agreed that the award should be $9,000,000, with the remaining two wanting to award $12,000,000. While this would normally be a workers compensation claim, in New York State, absolute liability is placed on the owner of the property. The settlement costs for these injured workers are huge.


5.   A woman was raped in the laundry room of a cooperative apartment building when a door in an alleyway leading to the laundry room was left unlocked. The cooperative was sued for $10,000,000; it settled for $3,000,000 with the umbrella paying $2,000,000.


Unexpected things happen, including catastrophes like the building collapse in Miami this past summer. Commercial umbrella insurance is there to provide excess coverage up to $100,000,000 over the limits of the existing policies of:

  • General Liability
  • Directors & Officers Liability
  • Business Automobile
  • Workers Compensation
Lawsuits are increasing, juries are more sympathetic, and jury awards and settlements are regularly being paid by umbrella insurance. It is better to pay a little now for vital protection than to have to come up with millions of dollars, plus legal expenses to pay a claim sometime in the future.  
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