The Commercial Package Policy
1. INT RODUCTION
In this article, we’ll discuss insurance policies designed for businesses.
Because businesses share many of the same exposures to risks as individuals do, you will find many similarities between personal and commercial forms. Businesses also have many unique exposures that require different policies or modifications to the coverages we’ve already discussed.
Just as families often choose the convenience of package policies such as the homeowners policy or personal auto policy, businesses often choose to purchase several different lines of coverage in a single policy.
One of the most important commercial packages is ISO’s commercial package policy (CPP).
The CPP can be used to provide almost any commercial insurance the insured might need.
Almost all commercial risks are eligible for coverage under the CPP.
Like all package policies, the CPP offers advantages to both the insured and the insurer. Repetitive information is eliminated, and the policy is easier to understand.
Because of the economies an insurance company may realize when carrying several different lines of coverage for the same insured, the company is able to make package discounts to the insured, which provides further incentive for a package plan.
2. ELIGIBLE COVERAGES
The CPP can include almost any commercial coverage the insured might need, with the exception of ocean marine, workers’ compensation, and aviation insurance.
It can include:
■commercial property coverage;
■commercial general liability coverage;
■commercial auto coverage;
■commercial crime coverage;
■commercial inland marine coverage;
■boiler and machinery coverage;
■professional liability coverage;
■employment practices liability coverage;
■liquor liability coverage;
■pollution liability coverage; and
■capital assets program (output policy).
■The following coverages are not eligible:
■Risks eligible for the homeowners program
■Coverages excluded by state regulation
You’ll learn more about each of these lines of insurance as you progress through the course.
Each line of insurance eligible for the CPP has its own coverage part consisting of a variety of mandatory and optional forms that are used to provide the coverage desired.
The forms and endorsements available under each coverage part can be used to issue a policy covering a single line of insurance or combined to provide a commercial package policy.
A commercial package policy consists of:
■common policy declarations;
■common policy conditions; and
■two or more coverage parts.
For instance, a commercial package policy might include both a commercial property coverage part and a commercial general liability coverage part.
A CPP might also contain interline endorsements—endorsements that may be used with more than one line of insurance. Some interline endorsements are mandatory, while others are optional.