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Business Owners & Commercial Packages

Whether you’re interested in a business owner’s policy (BOP) or a Commercial Package Policy (CPP), it’s important to learn about the differences between the two so you know you’re getting the right one to meet your needs. The better you understand the two policies, the wiser choices you can make about which one serves your business best.

What Does a Business Owners Policy Offer Businesses?

Business owner’s insurance, sometimes called BOP insurance, offers bundled insurance coverage that small businesses need. The benefit to businesses is that this presents a wide range of options to small business owners at affordable prices.

For many business owners, the BOP represents a better coverage option than other alternatives. 

What’s Included in a BOP?

The business owner’s insurance policy offers basic protection for the following:

  • Commercial property
  • General liability
  • Business income

A BOP combines business liability insurance and business property insurance into one policy. It helps protect your business from claims that result from things like:

  • Theft
  • Fire
  • Other covered disasters

It also helps cover business operation claims, including property damage or bodily injury and claims related to advertising and personal injury.

BOP policies can be custom-made to suit industry-specific businesses, making them perfect for any size business, particularly small businesses.

What Does a Commercial Package Policy (CPP) Offer Businesses?

CPPs are designed with medium to large businesses in mind and offer great flexibility and robust insurance protection. The average CPP offers fundamental commercial property and general liability protection. The customization possibilities are nearly limitless and include many of the options for coverage listed below:

  • Business crime insurance
  • Business income coverage
  • Commercial auto insurance
  • Commercial umbrella liability protection
  • Electronic data processing protection
  • Employment practices liability insurance
  • Equipment breakdown insurance
  • Inland marine protection
  • Pollution liability

With all that in mind, there are still things the average CPP doesn’t cover. You’ll need to fill in the coverage gaps through individual policies.

Differences Between a BOP and CPP

The main differences between a BOP and CPP include the following:

1) Design

With a CPP, you combine multiple coverage parts, such as business interruption, property, crime, liability, umbrella, inland marine, and auto. You can choose which ones most suit your type of business.

With a BOP, you get preset coverages and can add on others if desired. However, you must have general liability and insure either business personal property or buildings (or both).

2) Eligibility

With a BOP, you have defined restrictions, whereas, with the underwriting for a CPP, it could encompass just about any risk you’re willing to write.

3) Property Coverage

There are a few CPP property categories: business personal property, buildings, and property of others.  There are two with a BOP, which is folding others’ property into the business personal property restriction.

There are also some building inclusions.  A CPP includes business personal property. In contrast, a BOP would consist of personal property a landlord furnished under the “buildings” category (i.e. apartment furniture).

Certain property is or isn’t excluded. BOPs don’t exclude things like below-ground structures, foundations, walks, roadways, and patios like CPPs exclude.

You have a choice of broad, basic, or special perils with a CPP. With a BOP, there are special-form perils.

BOP’s, for business interruption, will cover your actual loss of income sustained, along with any extra costs you incurred for a restoration period of no more than 12 months after you experience the property loss. CPPs require you to choose a proper coverage form with a wide range of choices.

For valuation, with a BOP, most property is insured on a replacement-cost basis if you have the property insured with a minimum of 80% of its value. With CPPs, you must select the replacement-cost option to avoid an actual-cash-value settlement, and you must choose a coinsurance percentage.

As for extensions and additions, you’re provided with more coverage extensions and additions with a BOP, but with a CPP, it’s created for covering the actual exposure.

Working with an independent insurance agency can help you find the right bundled and individual policies to ensure all your insurance protection needs are in place.

Begin with the basics your business requires and seek to expand your coverage from there

Contact Generazio Associates at (973) 429-8100 to discuss how we can help with your business owners and commercial packages insurance needs.