The Difference Between a Business Owners Policy and a Commercial Package Policy
When you are researching business insurance, you will often see that you have the opportunity to bundle numerous benefits into one package of coverage. Commercial insurance packages offer customers convenience by combining important insurance options from which every business can benefit. Often, these packages are more affordable than buying policies piecemeal, as well.
The two main packages for businesses are a business owners policy (BOP) and a commercial package policy (CPP). Coverage between these two policies are similar, but there are also stark differences.
A business owners policy covers:
Property Coverage: Property coverage provides compensation if the commercial building owned by the business is lost or damaged due to fire, lightning, smoke, theft, vandalism or other covered danger.
General Liability: General liability provides compensation if a third party is injured or has their property damaged due to every day operations by the business. It can also cover legal fees if the victim decides to sue.
Business Interruption Insurance: In the event that your business suffers a problem and has to temporarily close as a result, this coverage can help you cover the lost income and financial challenges that might arise as a result.
A commercial package policy covers all of the benefits within a BOP, but it can be expanded upon in ways that are more effective . It’s more flexible and can often include:
Commercial Auto Insurance: Most states require businesses to carry commercial auto insurance. This insurance provides coverage similar to personal auto insurance such as comprehensive, collision, and uninsured/underinsured motorist coverage.
Equipment Breakdown Coverage: Some businesses require expensive equipment. Equipment insurance can help replace broken equipment. This is especially important for restaurants and other businesses that handle produce that need refrigerators and freezers.
Crime Insurance: Crime insurance protects your company from theft by employees or managers that might affect both the company and its customers.
Inland Marine Insurance: Commercial auto insurance typically won’t cover items in transit. Inland marine insurance provides compensation if items or equipment are lost or damaged.
Who Needs What Policy?
In general, small business owners tend to purchase a BOP while larger businesses purchase a CPP. CPPs are much more malleable than BOPS, but they’re also more expensive. For small business owners, a BOP is affordable while providing the basic coverages they need to protect their business.
These small businesses are also usually considered low-risk, while businesses with CPPs face higher or more frequent risks. Still, even though a small business might buy a BOP, that doesn’t mean they won’t need to buy other, supplementary policies to offer themselves adequate coverage.
The cost of these policies depends on a number of factors, including the size of the business and the coverage limits the business chooses. Speak to one of our agents to learn more about how this coverage can benefit you.