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.
Key Takeaways
- Bumbershoot policies are a type of excess liability and umbrella insurance for the maritime industry.
- Bumbershoot policies 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.
- The injury rate for shipyard workers is twice that of other U.S. workers.
- 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.
- Bumbershoot policies are key for countries that have large amounts of exports done via sea transportation, or countries that benefit from such exports.
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.
The injury rate for shipyard workers is more than twice the rate of other U.S. workers.
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.
A bumbershoot is a word for umbrella that came into usage in the late 1800s in the United States. It started as a portmanteau of umbrella and parachute.
Special Considerations
International trade grew rapidly following the conclusion of World War II. Globalization and technological advancements accelerated the flow of imports and exports around the world.
The importance of shipping to the global economy cannot be overstated. Sea freight accounts for 90% of globally traded goods. In the United States, waterborne shipping moved nearly 1.5 billion tons of goods worth more than $1.5 trillion in 2020.
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.
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