Business owners have many decisions to make when running their businesses, from inventory management and human resources to insurance and risk management. It can be challenging to know what kinds of insurance coverages are the best to purchase for your small business.
You may have heard of two main types of package policies – the Commercial Package Policy and the Business Owners Policy. But what are the differences between these two types of packages, and which is best for your small business?
Read on to learn more about these commercial policies, which are best suited for your business, then reach out to the experts at Fusco, Orsini & Associates for more help.
Both the Commercial Package Policy and the Business Owners Policy offer certain benefits for small business owners. Each policy type is best suited for different types and sizes of businesses.
Commercial Package Policy
The Commercial Package Policy (CPP) allows business owners to package several commercial policies into one Commercial Package Policy. For larger or growing companies, or for companies with specialized risks, the CPP may be the better choice when compared with the Business Owners Policy.
What Coverage Types Does the CPP Bundle?
The CPP form allows for the bundling of several policy types. Policyholders can determine which coverages they need based on their risks and exposures and package the relevant policies together.
Property insurance and commercial general liability are the two essential policies that usually form the CPP base as most businesses need these coverages. From there, insurance professionals add additional coverage as required:
- Business interruption
- Business Personal Property
- Cyber and Privacy
- Equipment breakdown – also known as Boiler and Machinery
- Employment practices liability
- Hired & Non-Owned Automobile Liability
- Liquor Liability
- Professional Liability
- Tenant Improvements and Betterments
- Other specialized coverages as required by the type of business
What Coverage Types Does the CPP Not Include?
While the CPP includes many different coverage types, there are four insurance types that a CPP never comprises. If you need these coverages, talk to your agent about purchasing them separately.
- Directors & Officers Liability
- Workers’ Compensation
- Life Insurance
- Health and Disability Insurance
What are the Benefits of the CPP?
The CPP is a good choice for businesses with complex needs or those with unusual risks. Growing companies may find the CPP’s flexibility helpful as they expand into new markets or different products, which introduces unknown risks.
The CPP offers the ability to bundle many more types of policies than the BOP, making it attractive to policyholders who need these various coverages. The CPP is more complex than the BOP; however, if your business does not require additional coverages, the CPP may not offer any other advantages over the BOP.
Business Owners Policy
A Business Owners Policy (BOP) is a popular package policy that includes various commercial coverages like general liability, property damage, and business interruption (business income). Insurance companies designed the BOP for small businesses, so if your business is too large, a BOP would not be the right choice. The BOP also covers fewer risks than the CPP and is better suited for companies with less specialized risks. Many business owners find the BOP sufficient for their insurance needs.
What can be Bundled Together in the BOP?
The BOP consists of three policies bundled together:
- Commercial General Liability – covers if someone is injured at your business or from the use of your products or services
- Property Damage – this is designed to cover damage to property such as your buildings, fences, inventory, equipment, and more
- Business Interruption – Business interruption or business income insurance replaces your business income if a covered loss causes you to close or relocate your operations. Business interruption cover has been in the news lately due to pandemic restrictions on this coverage, but it remains essential coverage to have.
What Does the BOP not Include?
The BOP does not include several essential coverages that you may need as a business owner, including professional liability, commercial auto, Workers’’ Compensation, crime, equipment breakdown, and other specialty coverages.
What are the Benefits of the BOP?
The BOP is an excellent choice for customers who have smaller businesses and have simple insurance needs that align with other companies of their same type. Because the BOP design meets many general commercial needs, it appeals to many standard businesses with similar risk profiles.
The BOP may provide sufficient cover for the lifetime of your business, or it may be an intelligent way to secure necessary coverage when just starting. Once your business grows and increases in complexity, switching to the CPP to take advantage of the additional coverages you can bundle may be a savvy business move. Still, for many business owners, the BOP will continue to meet their needs.
You may also find the BOP meets your needs with the additional purchase of one or two key policies, such as Workers’’ Compensation and Commercial Auto. You do not need to purchase a CPP to add these different policies; instead, they can be added separately as necessary while retaining the BOP for your general liability, property damage, and business interruption coverage.
Business Owners’ policies and commercial package policies both afford protection to business owners. Which package policy you select depends on your business’s size, complexity, and unique risks.
Both types of package policies simplify your coverage by bundling different policies together, streamlining the insurance experience for you as the customer. If you have simple risks and a smaller business, the BOP may suit your needs and is an efficient and effective solution for many small business owners. The BOP is an approachable way to seek coverage for your business and fits many small business owners’ needs throughout their companies’ lives.
If you find you have unique risks that set your business apart from others, or if your business is large and growing, the CPP may be a better package policy for your business. It offers more flexibility to customize the coverages you purchase better, reflecting some businesses’ varied nature. As your needs change, the CPP can change with you by adding various coverages and removing others.
With both types of package policy, there will be some coverages you may need that are not part of the package. In those cases, you will need to purchase those policies separately. Workers’ Compensation and health insurance are examples of coverages that cannot be bundled into either the BOP or CPP and would require separate policies if the cover is needed.
Because the nuances may be slight between the BOP and CPP depending on your business needs, contact your insurance agent to discuss options.
How do I Learn More?
Now that you know more about commercial package policies and Business Owners’ policies, you can contact Fusco, Orsini & Associates for more information. Our licensed professionals will be happy to answer any questions you have.