What Is a Commercial Package Policy?
A commercial package policy (CPP) is an option for businesses looking to bundle some of their insurance policies. While the exact contents of a CPP can vary quite a bit, the basis of every commercial package policy includes two common forms of business insurance:
- General liability insurance: While not required by law, general liability insurance is carried by the vast majority of American companies. This insurance policy covers some of the most common claims faced by companies across a range of industries. These include third-party bodily injury, third-party property damage, advertising liability, libel, slander, and copyright issues.
- Commercial property insurance: If you have a physical building for your business, it’s important to protect it with commercial property insurance. This form of coverage gives you protection in the event of damage caused by natural disasters, fires, burst pipes, and other perils. In addition to your building, commercial property insurance covers your signage, furnishings, equipment, inventory, fencing, landscaping, and any third-party assets located on your property.
What Advantages Do Commercial Package Policies Have?
The two biggest advantages of a CPP are convenience and cost saving. Bundled policies generally come at a discounted rate, saving you money over purchasing each policy individually.
Additionally, having all or several of your insurance policies in one package means dealing with fewer companies, agents, and premium due dates.
How Is a CPP Different from a Business Owner’s Policy?
A business owner’s policy (BOP) also includes general liability insurance and commercial property insurance. Many entrepreneurs wonder whether a BOP or a CPP is the best option for their company.
In general, a business owner’s policy is intended for small businesses that don’t have complex compliance requirements or specific insurance needs. On the other hand, a commercial package policy is much more customizable to fit the needs of a wider variety of businesses. A CPP has a broader selection of coverage options and more-generous policy limits.
What Additional Coverage Can Be Added to a CPP?
A commercial package policy offers the flexibility to bundle a great number of different insurance policies. While this list is far from exhaustive, some of the most common policies included are:
- Business interruption insurance: With this form of insurance, your business receives lost revenue coverage if it is forced to close temporarily. In addition, business interruption coverage can help you pay your rent or mortgage payments and assist with payroll coverage, moving costs, tax payments, loan payments, civil authority coverage, and more.
- Professional liability insurance: While general liability insurance protects your business from common claims that are applicable to any company, professional liability insurance hones in on the dangers faced by your specific business type or industry. It covers claims made against experts, including negligence, legal defense costs, libel or slander, and copyright/trademark disputes.
- Commercial auto insurance: If your business involves transporting people or goods, you will need to carry commercial auto insurance. These policies are essentially identical to personal auto insurance and cover liability, medical costs, collisions, and uninsured/underinsured motorists. This is one notable form of insurance that cannot be added to a BOP.
- Crime insurance: Adding this coverage to your CPP protects your business from losses due to corporate crimes such as forgeries and alterations, computer fraud, funds transfer fraud, employee dishonesty, kidnap, ransom, extortion, and counterfeiting.
- Commercial umbrella insurance: Umbrella insurance supplements your existing liability policies to expand the limits of those policies. For example, commercial umbrella coverage goes beyond the limits of your general liability and professional liability policies, enabling your company to handle larger claims.
- Employment practices liability insurance (EPLI): This policy covers your business in the case of employee discrimination claims. It also protects your company in the face of wrongful termination allegations and harassment claims.
- Equipment breakdown insurance: If your equipment—including heating, air conditioning, electrical, and telecommunications implements—breaks down or malfunctions, this form of insurance provides coverage for any necessary repairs.
- Cyber liability insurance: This policy will cover legal fees, data recovery, and identity restoration due to a cyber attack on your business. About two-thirds of all cyber attacks impact small to medium-sized businesses, making this coverage important for companies of all sizes.
- Supply chain insurance: This form of insurance covers your company from business interruptions as a result of delayed or disrupted products or services from one of your suppliers. If your company manufactures physical products, it’s a very good idea to acquire supply chain coverage.
What Coverages Are NOT Part of a Commercial Package Policy?
There are a few different types of insurance coverage that cannot be bundled into a commercial package policy. No matter what type of business you run or which insurance provider you receive your CPP from, you will not be able to include the following four types of coverage:
- Directors and officers (D&O) insurance: Larger companies may want to look into D&O coverage in addition to their CPP. This variation of liability insurance reimburses company shareholders for claims made against them. In essence, this covers your directors and officers if they are sued for the adverse consequences of their managerial decisions.
- Workers’ compensation insurance: The only form of insurance that’s required by most state governments is also one that cannot be bundled into a commercial package policy. While your business will need workers’ comp (unless you’re in Texas, the only state that doesn’t require it), it isn’t available as part of your CPP.
- Health, disability, and life insurance: If you want to offer your employees fringe benefits, that’s great! However, you will need to do so with separate policies, as none of these can be added to a CPP.
When Should You Acquire a CPP?
In most cases, you should obtain a commercial package policy for your company before you ever open your doors for business. It’s never advisable to operate your business without insurance coverage, even if it’s just for a handful of days, because your company could always be hit retroactively with a lawsuit for an incident that took place during the uninsured period.
Insurance is a serious investment, especially for companies that don’t have a lot of capital in the startup phase. On the other hand, if you can’t afford insurance, you absolutely cannot afford the full cost of a lawsuit against your uninsured or underinsured business.
Commercial package policies are a great option for companies that want to bundle multiple insurance coverages into one—especially if your business is too large or too specialized to get a business owner’s policy. The highly customizable nature of a CPP means that most insurance providers should be able to tailor one to the needs of just about any company, including yours!
We hope this article provided the answers for your tough questions about commercial package policies. While business owner’s policies are usually a bit cheaper, they’re only available to certain types of small businesses, making CPPs the standard for all other companies.