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Commercial Rates Are Easing. Do Not Let Your Liability Limits Be the Place You Cut.
By Toby Hartman, MM Insurance Associates
If you are a business owner, your renewal may finally bring some welcome news. The commercial insurance market is becoming more competitive in several areas. The Council of Insurance Agents and Brokers reported that average commercial premiums fell 2 percent in the second quarter of 2026. Commercial property fell 6.3 percent, and workers compensation was also among the lines seeing decreases.
That does not mean every part of your insurance program should get smaller.
Umbrella liability increased 5.3 percent in the same survey. Commercial auto increased 4.5 percent. Those two numbers tell an important story. Property capacity has improved, so insurers are competing harder for property business. Serious injury claims, large vehicle losses, and litigation have not become less expensive. In fact, they remain the pressure point in a business insurance program.
The limit on a certificate can help you win the work
I see this in construction and service contracts all the time. A general contractor, property owner, municipality, or larger customer wants proof that the companies working for them can stand behind the risk they bring to the job.
A $1 million general liability policy may be a sound starting point for a smaller business. But it may not meet the requirements of a project owner or general contractor. Contracts increasingly call for higher total liability limits, often through a commercial umbrella policy that sits above general liability, auto liability, and employers liability coverage. A current construction contract guide from Alliant recommends $5 million in general liability limits for construction risks, while a 2026 engineering firm specification requires a $2 million umbrella above general liability and auto liability.
The right limit depends on your work, payroll, vehicles, subcontractor exposure, customers, locations, assets, and contract requirements. There is no responsible one size fits all answer. But reducing a limit simply because property pricing is better can close doors before you have the chance to bid. If the certificate does not meet the requirement, the contract may go to a competitor who does.
What happens when the primary limit is not enough
A commercial umbrella is not just a line item that makes a certificate look stronger. It is the layer intended to respond after covered losses exhaust the liability limits underneath it, subject to the policy terms and exclusions.
Here are two real examples that show why that layer matters:
Construction general liability: In an Illinois construction case, a worker injury claim settled for $4 million. Two primary insurers each paid their $1 million limits, and the subcontractor's umbrella insurer paid $2 million. That is a concrete example of a serious jobsite injury moving past the primary general liability layer.
Commercial auto: In the Fifth Circuit case involving Pride Transportation, a serious motor vehicle injury claim was evaluated at $8 million to $10 million. The motor carrier had a $1 million primary auto liability policy and $4 million of excess coverage. The matter ultimately settled for the full $5 million combined policy limits. That claim crossed the primary auto limit by $4 million.
These are not predictions about any one business. They are reminders that a severe injury, a multi vehicle crash, or a jobsite accident can move well beyond a standard primary limit. Every claim is fact specific. Policy terms, exclusions, underlying limits, and contract wording matter.
Preserve the limit, then review the whole program
At renewal, I would not tell a business owner to ignore better pricing. We should seek it. A competitive property market creates an opportunity to review the program and improve value.
But I would separate a pricing decision from a liability limit decision. Before reducing your umbrella, ask:
What limits do our current and target customers require?
Will our general contractors accept our certificate as it stands?
Do our auto, general liability, and umbrella limits work together?
Have we added vehicles, drivers, locations, revenue, equipment, or subcontractors?
Are additional insured and contract requirements being reviewed before we sign?
Insurance cannot replace safe work, driver training, or contract discipline. It can make the financial result of a serious event more manageable. Maintaining a strong liability limit is also part of staying eligible for the work you want to win.
If you are reviewing a renewal or a contract requirement, call MM Insurance Associates at (262) 754 4736. We can review the contract, the underlying liability limits, and the umbrella together, before a certificate becomes a barrier to the next job.
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