Commercial Package Policy (CPP): : What it Means, How it Works

Commercial Package Policy (CPP)

Investopedia / Sydney Saporito

What Is a Commercial Package Policy (CPP)?

A commercial package policy (CPP) is an insurance policy that combines coverage for multiple perils, such as liability and property risk. A commercial package policy allows a business to take a flexible approach to obtain insurance coverage. The benefit of CPP is that it may allow the business to pay out a lower amount of premiums than if it purchased a separate policy for each risk.

Key Takeaways

  • Commercial package policies (CPPs) are insurance policies that combine policies, such as liability and property.
  • These policies are often meant for small- to medium-sized businesses.
  • CCPs can include general liability, property, auto, and crime policies, among others.
  • Some types of insurance aren't allowed in CCPs, such as workers' compensation and life group life insurance policies.
  • CCP differs from the business owner policy (BOP) because the CCP is customizable, while BOP offers a set of policies that cannot changed.

How a Commercial Package Policy (CPP) Works

Insurance companies typically write commercial package policies for small or mid-sized businesses. These types of businesses may have smaller liability needs because they do not operate large facilities, or because they only require additional insurance protection for small risks. For example, a light manufacturing company or car wash facility is less likely to require the same amount of coverage that a real estate developer requires.

Commercial package policies allow for a high degree of customization and may combine two or more coverages into a single policy. While each plan is specific, the average CPP will cover different property and liability exposures. Coverage options include general liability and property coverage. Business auto policies are commonly added to the bundle, along with crime protection. Crime protection policies are insurance against more than just vandalism and include coverage for embezzlement, forgery, check, or money tampering and credit card fraud.

Inland marine coverage is also common under a commercial package policy, which provides on-the-ground coverage for items in transit. Additional policies can be added at an additional expense, allowing each business to cover precisely cover its unique set of risks.

Commercial package policies can't include certain items like workers' compensation or directors-and-officers insurance. Workers' compensation insurance is required by law and must be purchased as a separate policy. Directors-and-officers policies are necessary for non-profit organizations. Group life and disability policies are also separate items with different policy choices and decisions. 

Commercial Package Policies vs. Business Owner Policies (BOP)

A commercial package policy differs from a business owner policy (BOP). While a business owner policy also combines multiple coverages, it often includes a variety of standard coverages that may not be of interest to the policyholder. For example, the policy may consist of business income coverage regardless of whether the policyholder wants this. Commercial package policies only include coverages that are explicitly selected by the policyholder.

Before purchasing a commercial package policy, it is important that a business understands the risks that it faces. This type of policy only covers specific risks, so if the insured party does not include insurance against a particular event, then it will find itself without coverage. This type of policy also doesn’t cover workers’ compensation, life, health, or disability.