BOP vs. CPP vs. GL
When choosing commercial insurance in Michigan, different types of policies are offered, such as business owner policy (BOP), general liability (GL), and commercial package policy insurance plan (CPP). These policies are usually sold bundled together to help small businesses save money by not having to buy separate policies. Other types of insurance are usually sold as add-ons and individual coverages.
The main difference between a commercial package and a business owner's policy is that BOP is a pre-packaged bundle that includes non-removable coverages, while CPP allows you to build the package according to your needs from scratch - as long as it includes two or more coverages.
BOP is a type of insurance package that provides the three main business insurance coverage needs: property, business interruption, and general liability. A BOP can benefit small and medium-sized businesses with few risks regarding their products and services. Some of these include restaurants, retail shops, and offices. However, BOP may not be suitable for all businesses, and it's important to speak with a Michigan-licensed insurance agent to determine if it's the right choice for your specific business needs.
CPP allows businesses to have more options when creating their insurance package. Unlike a BOP, which provides three basic mandatory coverages and limited additional modifications, a CPP allows businesses to customize their insurance bundle to fit their business risk profile, with as little as just two chosen coverages. There is no maximum. You can add as many coverages to a CPP policy, as needed.
GL policy only covers injuries and damage to third parties that your business causes. The policy is designed to protect businesses from financial losses arising from lawsuits or claims brought against them by customers, vendors, or other third parties. GL policies typically cover legal fees, settlements, and judgments up to the policy limits. It will not cover injuries to your employees or damage to your business property.
The common feature that a BOP, CPP, and GL share are that they all provide coverage for different aspects of a business's liability and property risks.. These insurance bundles are designed to help businesses save money while providing them with the necessary coverage. Both standard BOPs and CPPs typically come with the property and general liability coverage.
BUSINESS OWNER’S POLICY (BOP)
A business owner's policy (BOP) is a type of commercial insurance package that provides the insured Michigan businesses with the basic set of coverages and an option to add other options as extras.
The basic minimum BOP set of coverages in Michigan always includes:
- Property insurance,
- General Liability insurance,
- Business Interruption insurance.
If you want to add any other commercial insurance policies to the BOP package, some can be added, while others must be purchased separately. Typical business owner's policy in Michigan may include:
- Building and personal property protection
- Business income insurance
- Coverage for inventory loss
- Crime insurance
- Fire legal liability coverage
- Hired or Non-Owned Auto (Liability ONLY)
- On-site equipment insurance
- Premises liability coverage
- Premises medical coverage
- Products and completed operations coverage
BOP in Michigan can not include the following types insurance:
- Commercial auto insurance (full coverage must be purchased separately or included in a CPP),
- Disability insurance
- Health insurance
- Professional Liability Insurance
- Worker’s Compensation
COMMERCIAL PACKAGE POLICY (CPP)
A commercial package policy gives Michigan businesses flexibility to combine multiple coverages for the best possible protection. It can address various risks based on the needs of the business, without being locked in to the minimum required coverages, like you are with the BOP.
- With CPP, if you do not need some coverage, you keep it out.
- CPP can be as small as just two coverages.
One of the most significant advantages of CPP is that unlike the BOP, it allows businesses to add full commercial auto coverage to the package.
Commercial Package Policy in Michigan can combine two or more of the various coverages:
- General liability insurance,
- Business property insurance,
- Commercial auto insurance (full coverage),
- Crime insurance,
- Professional liability,
- Product liability,
- Cyber liability, and others.
Commercial package policy cannot include worker's compensation or group health and life insurance. They must be purchased as separate policies.
GENERAL LIABILITY (GL) POLICY
General liability insurance protects businesses against liabilities arising due to property damage or bodily injury during operation or on the premises of an insured business. Similar to liability car insurance, which pays for the damage you cause to others in an accident, General Liability policy protects others from the actions or inactions of the insured Michigan business.
GL in Michigan can be either claims-based or occurrence based, which makes a big difference for how a business may deal with delayed risk:
- A claims-based liability insurance policy pays for a loss or injury that occurs and is reported while the coverage is active. If the business gets sued for something that happened while the policy was active, but the lawsuit arrives after the policy is no longer in effect - claims-based policy will not cover the damages. The next day after the policy expires it not will no longer accept any claims.
- Occurrence-based policies provide lifetime coverage for losses that occur during the coverage period, even if they get reported after the coverage has already ended. Using the example from above: if the lawsuit arrives 20 years after the date of the loss, as long as it occurred while the policy was active - your business is covered.
Make sure to discuss your business insurance needs with a Michigan-licensed commercial insurance agent who can advise on the best coverage type for your type of business.
The core coverages of a commercial general liability policy in Michigan include:
- Bodily Injury And Property Damage Liability: This type of insurance provides coverage for damages that cause bodily injury to other people and damages that you cause to third-party assets.
- Personal and Advertising Injury Liability: This type of insurance is commonly used to protect individuals from various claims, such as defamation, false arrest, and improper eviction. It also provides coverage for improper use of copyrighted materials in your business.
- Medical Payments: This coverage pays for medical bills arising from third-party bodily injuries. This type of coverage is commonly referred to as a goodwill policy to protect customers when injured.
In addition to general liability insurance, a business owner in Michigan can also add additional risks to their policy. For instance, they can purchase employment practices liability insurance to cover claims related to sexual harassment and wrongful termination. They can additionally purchase errors and omissions insurance to cover the liabilities of professional advisors, such as consultants, attorneys, and insurance agents.
Speak with a Michigan-licensed commercial insurance agent who can help your business find the ideal insurance policies according to the business needs.
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