A contractor is looking for an insurance policy to cover a high degree of exposure to risk. Which policy would be best for this purpose?

A contractor is looking for an insurance policy to cover a high degree of exposure to risk. Which policy would be best for this purpose?

• A. Auto liability
• B. Workers' compensation
• C. Builder's risk
• D. Umbrella

Answer: (D)

An umbrella policy provides an extra layer of liability protection that sits on top of your existing coverages. For a contractor with high exposure, it adds higher limits for a broad range of claims—bodily injury, property damage, and more—once the limits of your underlying policies (like general liability, auto liability, and workers’ comp) are reached. It can also cover defense costs and some claims not fully covered by those underlying policies, helping protect your assets from large lawsuits or settlements. The other policies address more specific risks: auto liability covers vehicle-related incidents, workers’ comp covers employee injuries, and builder’s risk protects the physical structure under construction. They don’t provide the extended, cross-cutting protection that an umbrella offers, which is why this choice is best when risk exposure is high.

An umbrella policy provides an extra layer of liability protection that sits on top of your existing coverages. For a contractor with high exposure, it adds higher limits for a broad range of claims—bodily injury, property damage, and more—once the limits of your underlying policies (like general liability, auto liability, and workers’ comp) are reached. It can also cover defense costs and some claims not fully covered by those underlying policies, helping protect your assets from large lawsuits or settlements. The other policies address more specific risks: auto liability covers vehicle-related incidents, workers’ comp covers employee injuries, and builder’s risk protects the physical structure under construction. They don’t provide the extended, cross-cutting protection that an umbrella offers, which is why this choice is best when risk exposure is high.