What is a package policy?

A package policy is a type of insurance that combines multiple coverage types into a single policy, typically including both property and liability coverage. This approach provides comprehensive protection by bundling various risks under one contract, which can lead to simplified management of the insurance needs and potentially lower premiums compared to purchasing separate policies for each type of coverage.

In the context of insurance practices, package policies are often used in both personal and commercial lines. For instance, a common example of a package policy in personal lines is a homeowners insurance policy, which includes coverage for the dwelling (property) as well as personal liability. In commercial contexts, a business owner’s policy (BOP) serves as a package policy by combining property insurance with liability insurance.

Other options do not accurately describe what a package policy entails. Focusing solely on liability or health coverage does not encompass the broader scope of risk management that a package policy aims to provide. Additionally, while there are specific policies for businesses, package policies are not exclusively for such purposes, as they also apply widely in personal insurance.