What is a Bumbershoot Policy

The Bumbershoot policy is a specialized form of excess liability insurance targeted to the maritime industry. These policies cover a company for hazards in limits that exceed the underlying liability policy. The Bumbershoot coverage most often adds to the protection from an umbrella liability policy.

Policies cover dry and wet incidents or nonmarine and maritime activities.

BREAKING DOWN Bumbershoot Policy

A Bumbershoot insurance policy is a specialized business umbrella insurance coverage. The product protects a business from the risks explicitly associated with wet and dry maritime industry. Like an umbrella policy, Bumbershoot policies provide a broader level coverage, expanding the underlying primary commercial lines insurance policies.

Commercial lines insurance include coverage specific to the 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. Premium costs will vary by business type, size, location, and coverage levels. 

Designed with marine risks in mind, a Bumbershoot may 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. Shipyard workers face exposure to heavy equipment, hazardous chemicals, electrical shocks, and slips and falls. Occupational Safety and Health Administration (OSHA) finds that the injury and accident rate is more than twice the rate than in construction or general industries. 

Not only international freight shippers could use a Bumbershoot policy. Other business use includes that by shipyards and stevedores, charter vessels and marinas, as well as shipyards and terminal operators. A business involved in maritime services must assess risks when selecting insurance.

Policies also may include 

  • Worldwide coverage for acceptance and support around the globe
  • Environmental liability for spills or accidents which can happen at the dock, and at sea
  • Loss or damage of cargo during transportation
  • Pay expenses before the processing of a claim through pay on behalf of features
  • Personal injury coverage for workers and passengers,
  • Captive and hijacking situations 
  • weather incidents

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. In 2017, according to World Trade Organization (WTO) data, U.S. exports totaled over $1.5 billion of which 21.7% 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 $2.1 billion of merchandise, of which 72.8% traveled by sea, 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.