What is a commercial package policy for apartment buildings?

A commercial package policy (CPP) combines two or more coverage lines into a single policy with one set of common policy declarations and conditions. For apartment buildings, a typical package combines commercial property insurance, general liability insurance, and crime or fidelity coverage. Some packages also include inland marine, equipment breakdown, or other coverages. The CPP structure is standardized by ISO under its Commercial Lines Manual, which provides the common policy declarations (IL DS 00 01), common policy conditions (IL 00 17), and the individual coverage parts that are assembled into the package.

The main advantages of a package policy are convenience and cost. Managing one policy with a single renewal date and one set of paperwork is simpler than juggling multiple standalone policies. Insurers also typically offer a packaging discount, recognizing that the administrative costs of servicing one policy are lower than servicing several. The premium savings from packaging can range from 5% to 15% compared to purchasing each coverage separately.

A package policy also reduces the risk of coverage gaps between policies. When property and liability coverage are written by the same insurer under the same policy, there is less chance of disputes about which policy responds to a particular claim. However, a package policy may not always offer the broadest terms for each individual coverage. In some cases, a standalone policy from a specialized insurer may provide better coverage for a specific exposure. The right approach depends on the property's needs and the available market options.