Chances are, your business has either a Commercial Package Policy or a Businessowners Policy. The Businessowners Policy, or BOP, is a package policy designed for businesses of a simpler nature. Most businesses however are insured on a package policy.
A package in insurance lingo combines types of insurance in one policy. It takes at least two coverage forms to make a package policy. A coverage form details your insurance protection. Individual coverage forms may have additional conditions, or coverage limits.
So for a business, a package policy could mean one of each of these coverages:
Monoline (which means one line of coverage) insurance policies are still common; of course package policy discounts don't apply to these. Today, most businesses opt for the premium savings and more complete coverage of a package policy.
A Commercial Package Policy has a policy jacket that contains:
- general material common to all policies
- Declarations pages (often called "dec" pages)
- specific coverage forms
Some coverage forms you might see depending on your business needs are:
- commercial property
- commercial automobile
- general liability
- inland marine
- employment practices or employment-related practices liability.
Your agent's goal is to help you understand and select the coverage essential for your operations.
The Declarations pages personalize the insurance for you and your business. If any of the information on the Declarations pages is wrong, you may face disastrous consequences in the event of a loss. When you receive a new insurance policy or a renewal policy, your first priority is to review the new Declarations. Are all your business entities named correctly? Are the coverages and limits you agreed to listed as expected? This review is not a big job, but it is an important one.
Tip. Always review your Declarations pages.
Exclusions & Endorsements
Each coverage form in a package policy will have its own exclusions and perhaps one or more endorsements.
- Exclusions help set parameters on the coverage granted by the insuring agreements set out in the form.
- Exclusions are added to make a policy a better fit for certain insureds.
- Endorsements are additions to the policy.
You must take into account each part of the policy to understand the whole package. Just as it takes many parts to run the engine in a car, all the parts of an insurance policy must work together, too.
A Quick Review
- Package policies contain Declarations, Insuring Agreements, Exclusions, Endorsements, and Conditions. Each line of insurance has a separate form.
- The policy parts work in unison to provide coverage.
- Premiums are often discounted for package policies.
Beware, insurance terminology changes over time! Also, insurance companies add their own policy names. Why? It helps them differentiate their product and design policies for specific types of businesses.