Bumbershoot Policy

What Is a Bumbershoot Policy?

The Bumbershoot policy is a specialized form of excess liability insurance targeted to the maritime industry. The Bumbershoot coverage most often adds to the protection from an umbrella liability policy. These policies cover dry and wet incidents for maritime and non-maritime activities.

How a Bumbershoot Policy Works

A Bumbershoot insurance policy is a specialized business umbrella insurance coverage. Umbrella policies cover a company for hazards in limits that exceed the underlying liability policy. Bumbershoot policies protect a business from the risks explicitly associated with the wet and dry maritime industry. Like an umbrella policy, Bumbershoot policies provide a broader level of coverage, expanding the underlying primary commercial lines insurance policies.

Commercial lines insurance can include coverage specific to an industry, as well as general workers’ compensation insurance, general liability insurance, bodily and property damage, and litigation coverage. Commercial lines protect businesses against potentially devastating financial losses caused by accidents, lawsuits, natural disasters, and other adverse events.

Designed with marine risks in mind, a Bumbershoot can offer coverage for unique expenses related to collision and salvage as well as liability coverage that meets the standards set by the Longshoreman and Harbor Workers Act. 

Bumbershoot policies may include environmental liability for spills or accidents, which can happen at the dock or at sea. They can also cover loss or damage of cargo during transportation. International freight shippers tend to utilize these policies, but other users include shipyards and stevedores, charter vessels and marinas, as well as and terminal operators.

Special Considerations 

Since the end of World War II, the trend of international trade is increasing. Globalization and technological advancements make the import and export of goods more manageable and profitable. 

For 2019, according to World Trade Organization (WTO) data, U.S. exports totaled over $1.64 billion of which 20% used sea transport. The primary destination of these shipments of goods was the European Union (EU) who topped the U.S. in exports. EU export data shows a value of $2.4 billion of merchandise, with the primary destination being the U.S. 

Bumbershoot policies act as a fail-safe as it adds to the protection provided through regular policies. The premium for a Bumbershoot policy may be less expensive if purchased from the same insurer. Bumbershoot policies are key for countries that have large amounts of exports done via sea transportation, or countries that benefit from such exports.