What Is a Commercial Package Policy?

A commercial package policy (CPP) lets businesses bundle multiple coverages into one flexible policy, often at a lower cost than separate policies. It caters to varied business needs, covering threats like property damage, liability claims, and employee risks. Coverage options can be tailored for different industries and sizes, providing a truly customized insurance solution.

Read on to learn more about how to customize your commercial package policy.

Key Takeaways Commercial package policies are great for medium-sized businesses with diverse risks. CPP offers various coverages like general and product liability, commercial property and professional liability, among others. A CPP differs from a business owners policy in terms of flexibility and coverage options. The cost of a CPP can range from a couple hundred dollars to thousands of dollars and will depend on the number of coverages included, industry risk, location, company size and claim history.

How Does a Commercial Package Policy Work?

A commercial package policy (CPP) is a customizable insurance policy that allows businesses to bundle various coverages, addressing multiple risks under a single policy. By combining different coverages, businesses can benefit from enhanced flexibility and potentially lower premiums compared to purchasing each policy separately. This policy is especially valuable for businesses with diverse needs as it can be tailored to offer protection against a wide array of potential threats, such as property damage, liability claims and employee-related risks.

Do I Need a Commercial Package Policy?

Small to medium-sized enterprises (SMEs) can significantly benefit from integrating a commercial package policy (CPP) into their risk management strategy. Businesses with a heightened risk of customer lawsuits, such as daily-interaction barber shops, computer repair shops handling customer devices or busy neighborhood grocery stores, can find CPPs especially beneficial.

Insurers might market comparable packages under varied names like customer protector packages, but the underlying aim is consistent — bundle policies to afford broad coverage while optimizing costs.

Who Doesn’t Need a CPP?

Small businesses, especially those with minimal exposure to risks, might not require a CPP. These businesses typically have straightforward operations and fewer liabilities. Instead of a CPP, they can consider a business owners policy (BOP). A BOP is a more streamlined solution that combines essential coverages, making it a suitable choice for businesses looking to cover basic insurance needs without the complexities of a CPP (more on this later).

What Do Commercial Package Policies Cover?

A commercial package policy will often include general liability, commercial property and business interruption insurance to start. Below, we list additional types of coverage you can add to protect against your business’s unique risk exposures.

General Liability Insurance

General liability insurance provides protection to businesses against third-party bodily injury and property damage liability claims. For instance, if a customer slips and falls at a business premises and incurs medical expenses, general liability insurance would cover these costs, safeguarding the business from a potentially substantial financial blow.

Product Liability Insurance

Product liability insurance protects businesses against claims of bodily injury or property damage caused by the products they manufacture or sell. For example, if a company sells a defective appliance that causes harm to a user, product liability Insurance would cover the ensuing damages and legal fees. This is crucial for manufacturers, retailers and distributors, as it shields them from the financial repercussions of faulty products.

Commercial Property Insurance

Commercial property insurance covers the physical assets of a business, such as buildings, equipment, inventory and furniture, against losses due to covered perils like fire, theft and natural disasters. Suppose a fire breaks out at a manufacturing plant, damaging machinery and inventory; commercial property insurance would help in recovering the losses and rebuilding efforts.

Business Interruption Insurance

Business interruption insurance provides coverage for the loss of income and operating expenses when a business is unable to operate due to a covered loss like fire or natural disaster. So, if a restaurant has to close temporarily due to kitchen damage from a fire, business interruption insurance would cover the lost income and fixed operating costs during the closure period.

Inland Marine Insurance

Inland marine insurance offers coverage for goods, tools, equipment and other business property while it is in transit or temporarily located off-premises. If a construction company’s expensive equipment is damaged while being transported to a job site, inland marine insurance will cover their repair or replacement costs.

Professional Liability Insurance

Professional liability insurance, also known as errors and omissions Insurance, protects against claims of negligence, malpractice or errors in the professional services provided, as well as personal/advertising injury like slander and libel. For example, if an architect makes an error in a building design leading to structural issues, professional liability insurance would cover the legal fees and damages arising from the claim.

Commercial Auto Insurance

Commercial auto insurance covers business-owned vehicles for liability and physical damage. If a delivery truck owned by a business is responsible for causing a motor vehicle accident, this policy can cover the truck’s repair costs and any third-party injury or property damage liability claims.

Commercial Umbrella Insurance

Commercial umbrella insurance provides additional liability coverage beyond an underlying liability policy's limits. For example, say a customer successfully sues your business for $700,000 but your general liability insurance covers only up to $500,000. Your general liability insurance would pay up to its limits and umbrella insurance would cover the remaining $200,000.

Commercial Crime Insurance

Commercial crime insurance protects against losses due to criminal activities like employee dishonesty, theft, fraud or embezzlement. If an employee embezzles funds from the company accounts, commercial crime insurance would cover the loss.

Equipment Breakdown Insurance

Equipment breakdown insurance covers the cost to repair or replace equipment that breaks down due to covered perils such as power surges or mechanical failure. If a bakery’s oven breaks down due to an electrical surge, this insurance would cover repair or replacement costs and any income loss during the downtime.

Pollution Liability Insurance

Pollution liability insurance provides coverage for pollution-related losses, regulatory fines and cleanup costs. If a manufacturing plant accidentally releases pollutants into a nearby river, resulting in environmental damage and cleanup obligations, this policy would help cover the associated costs.

Additional Endorsements for a CPP

Above, we list several types of staple coverages but there are several other insurance riders you can include to further customize your CPP.

• Hired and non-owned auto insurance: Provides commercial auto coverage for hired or non-owned vehicles used for business purposes.
• Cyber insurance: Covers against losses resulting from cyber-attacks or data breaches.
• Employment practices liability insurance (EPLI): Protects against legal costs and damages related to employment-related claims, such as discrimination, wrongful termination and sexual harassment.
• Electronic data processing coverage: Covers physical loss or damage to electronic data processing equipment and the data itself.
• Debris removal insurance: Provides coverage for the cost of removing debris after a covered loss, such as a fire or a storm.

What Isn’t Covered by a CPP?

While CPPs are highly customizable, there are certain types of coverages that you may not be allowed to include in your policy:^[1]

• Directors and officers (D&O) liability insurance
• Life insurance
• Health insurance
• Disability insurance
• Workers' compensation insurance
• Key person insurance

As a result, you will need to purchase these policies separately and pay a separate premium.

How Much Does a Commercial Package Policy Cost?

Since CPPs are highly customized to the business’s unique needs, it is difficult to present an average cost. According to the Hartford, a commercial insurance policy can range in cost from a few hundred dollars to several thousand dollars.^[2]

A CPP lets businesses tailor coverage with added riders and additional insurance options, though premiums rise with more complex coverages.

Costs vary based on industry risk, with sectors like construction paying more due to heightened liabilities. Location matters too; businesses in crowded or disaster-prone areas face higher rates due to crime and natural threats. Additionally, companies with many employees, valuable property, or a history of insurance claims will see higher costs due to increased risks to the insurer.

What’s the Difference Between a CPP and a BOP?

One notable difference between a business owners policy versus a commercial package policy is that a BOP is a prepackaged policy, whereas a CPP is customizable.

A BOP provides predetermined coverage, typically including property, general liability and business interruption insurance. On the other hand, a CPP usually includes standard property and liability insurance but allows flexibility to modify coverages based on individual needs, depending on the insurance provider.

Despite these differences, there are similarities between the two. Both BOPs and CPPs provide robust commercial property and general liability coverages, catering to various business types and industries, making them cost-effective alternatives to buying each type of coverage separately. Additionally, the standard property coverage in both policies addresses similar risks, such as vandalism, fire and explosions, ensuring broad protection against common business threats.

How Do I Get a Commercial Package Policy?

When seeking commercial package insurance policy, obtaining a minimum of three to five quotes from varying carriers is advisable. Insurers will inquire about business specifics like industry, location, revenue and employee count. Providing this information for each can be cumbersome. Thankfully, insurance marketplaces like SmartFinancial can simplify this.

Within minutes, you can receive a tailored commercial insurance policy by completing a single questionnaire about your coverage requirements and budget. Input your zip code below to get your FREE insurance quote.