WEDNESDAY, MARCH 25, 2020
 When you’re looking for business insurance, a lot of insurance agencies will offer packages that can save you money on important coverages. Not all packages are equal, however, and not all of them fit any business.
What Does a Business Owners Policy Cover?
A business owners policy (BOP) is a policy tailored for small businesses in low-risk industries. This policy combines:
- General Liability: General liability provides coverage if a third party suffers bodily injury or property damage as a result of the business’ everyday business operations. It compensates for medical expenses and possible legal fees, should the victim decide to sue.
- Property Coverage: Property coverage provides compensation if your business’ physical property or contents are lost or damaged due to fire, lightning, smoke, theft, vandalism and more.
It can be slightly modified to include other coverages, such as professional liability and employment practices liability. Professional liability insurance covers acts of professional negligence, which means it covers instances where a claimed specialist (a surgeon, financial advisor, etc.) commits an act of negligence that results in a client losing money.
What Does a Commercial Package Policy Cover?
A commercial package policy (CPP) is a policy tailored for large businesses in high-risk industries. It combines general liability and property damage coverage. It can also include:
- Business Income Insurance: If a disaster halts the business’ operations, business income insurance can help cover the income that is lost while the business is inoperable.
- Crime Insurance: Crime insurance provides compensation in the unfortunate incident that an employee steals from the company.
- Equipment Breakdown: Certain equipment, such as refrigerators and freezers, are needed to keep your business running smoothly. Equipment breakdown insurance compensates for the cost of repairing equipment that suddenly breaks down due to a covered incident.
- Employment Practices Liability: In case an employee sues the company for their practices, employment practices liability insurance can step in to pay for legal fees. Employment practice claims include sexual harassment, unlawful hiring or firing, discrimination and more.
- Inland Marine: Some businesses frequently transfer cargo or equipment by vehicle. Inland marine insurance provides compensation if the items in transport are damaged or lost.
The line between these two packages is thin. BOPs are generally used by small businesses with less than 100 employees, in low-risk industries where expensive claims are rare. CPPs are used by large, high-risk businesses that need higher amounts of coverage. Coverage can be added to both of these policies, but CPPs are typically more flexible with additional coverages.
Is a BOP Cheaper than a CPP?
Cost when it comes to business insurance is tricky, as it depends on a lot of different factors, such as:
- Size of business
- Location
- Credit score
- Claims history
- Industry
- Coverage limits
With so many factors counting into the rates of each coverage, it’s hard to pin down an exact price. An average ballpark for a BOP is $1,200 a year. A high credit score, high coverage and a long claims history can make this number go up substantially, however. On the other hand, a good credit score and a low claims history can save you money on your BOP premiums.
Overall, CPPs are more expensive because they’re geared toward bigger businesses and often have higher coverage limits.
Both of these policies are designed for businesses to combine important coverages into one comprehensive policy that saves money compared to buying each coverage individually. There are some coverages that you may not be able to add to a BOP or CPP, so speak with your insurance agent about the type of coverage you need.
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