Commercial Multiline Policies: Easy, Economical, but Not Necessarily Sufficient

The terms "multiple-line" or "multiple peril" are used to describe an insurance policy that combines more than one of the traditional lines, or types, of insurance. There are many such commercial package policies on the market, each with a common purpose: to cover the major property and liability exposures faced by a business, organization or group of businesses. These policies are designed to meet virtually all your business insurance needs. For some specialized operations, unusual hazards may be covered separately or by endorsement.

Two commonly used multiple-line policies are the business owner's policy used for small stores and offices, and the commercial package policy (CPP) used for insuring other businesses.

Business Owner's Packaged Policy. Under the business owner's policy, both the building and business personal property are covered. Business personal property includes property of others held by the policyholder, improvements made by tenants and items temporarily away from the policyholder's location.

In addition to property coverage, the business owner's policy covers loss of business income and extra expenses resulting from damage to or interruption of business by an insured peril. Businesses can also purchase protection against burglary and robbery.

This policy also includes business liability and coverage for medical expenses. The liability section of the business owner's policy contains:

Personal injury liability - protection against harm other than physical injury, such as false arrest, slander or defamation of character.

Host liquor liability - applicable to situations where liability results from serving liquor at functions incidental to the policyholder's business.

Fire legal liability - coverage of the policyholder's liability, in case of fire or explosion, for damage to another person's real property that the policyholder rents or occupies.

Commercial Package Policy (CPP). The commercial package policy (CPP) is used primarily for larger, more complex businesses such as those in manufacturing, industrial and contracting. It is more flexible than the business owner's policy - in both the types and amounts of coverage - but contains fewer automatic coverages. Coverages needed are added by policy endorsement, and virtually all types of coverages are available under the CPP except workers' comp and surety.

Multiple-line policies are a convenient, economical and simplified means for obtaining a broad range of coverages. Your commercial insurance broker or agent will almost certainly steer you toward one, but don't be lulled into complacency. Every business is unique and the risk borne by each business is unique. Multiline policies are great, but make sure you know the risks you bear, the extent of each risk, and whether or not you're covered.