The first insurance most SMEs take out is a package: one policy covering the site's property against fire, storm, water damage and burglary, with glass added and possibly a liability module, a few questions about the activity, and that is it. This is not a bad start – a package is designed precisely so that a small company can obtain cover without administration. As a broker, I see that the problem is not the package but the fact that the company changes in the meantime while the package does not: three years later, the same policy is protecting twice as much stock, a foreign client and a production line bought on credit. In this article I describe what an SME package really is, where its walls are, what signs show that the company has outgrown it, and what a bespoke contract offers – and what it asks for. I do not mention product names or insurers: the structure is similar from insurer to insurer, the details differ, and in every case the wording of your own conditions decides. The earlier article on business insurance packages covers managing a package from a portfolio perspective; here the topic is the package as an insurer's product.
- An SME package consists of pre-assembled modules – fire and natural perils, burglary, glass, possibly liability and business interruption – with simplified underwriting and limits fixed in the conditions: that is why it is quick and simple, and that is why it has walls.
- The walls are in three places: in the limits and sub-limits, in the list of uninsurable property and activities, and in the scope and amount of the liability module – these are not flaws but the very definition of a package.
- A company has outgrown the package when a client, a financier, a stock peak or a single expensive machine goes above the package's limit; what is needed then is not a ‘better’ insurance but a contract based on an individual risk assessment – often alongside the package, not instead of it.
What is an SME package, and why is it built this way?
An insurer's package is a pre-assembled product: the insurer has decided which activities and which property it will accept, and up to what amount, with simplified underwriting – a questionnaire, no site survey. Hungarian packages typically consist of modules. The basis is fire and the related perils (lightning, explosion); to this you can add extended natural-perils cover (storm, hail, cloudburst, escape of water, earthquake), and with some products an all-risks version as well; the additional modules build on this: burglary and robbery, glass breakage, cash and valuables, business interruption, in some cases machinery breakdown and electronic equipment, and general liability insurance. The strength of a package is its simplicity: one policy, one renewal date, one premium, quick to arrange. The price of this is the same simplicity: simplified underwriting works only if the insurer sets the boundaries of the risk in advance – which is why a package has limits, exclusions and uninsurable activities fixed in its conditions. If you understand this, you will not be disappointed by the package: it provides what its conditions describe, and the insurer pays only for what is an insured event under your contract.
Where are the walls of the package?
The first wall is the system of limits. The sum insured for each property group (buildings, equipment, stock) is the upper limit of the indemnity; in addition, Hungarian conditions also contain indemnity limits per insured event, per item, for costs or for business interruption loss – so the limits table on the policy is more important reading than the premium. Sub-limits also hide in the details: one Hungarian set of commercial conditions pays, for escape of water, for replacing at most six metres of pipe, and pays for cloudburst and water damage to property stored in rooms below ground level only if it stood on shelving at least 15 centimetres high. Every package contains small rules like these, with content that differs from insurer to insurer. The second wall is the list of uninsurable property and activities: packages typically exclude property under construction or installation, documents and data, samples and prototypes, vehicles and works of art; another Hungarian set of conditions lists vacant buildings, disused equipment and dead stock among the risks for which the package cannot be taken out. On the activity side, more hazardous operations and certain industries often fall outside from the start – in each case, the list is set by your own conditions. The third wall is the liability module: the general liability insurance in a package typically covers property damage and bodily injury caused to third parties in the course of the activity, with a per-occurrence and an annual limit; professional liability (arising from defective performance), product liability, tenant's liability or employer's liability is often a separate module, or not part of the package at all. If you call the liability line of your package ‘the company's liability insurance’, you often do not see this boundary; the article on hunting for gaps teaches you how to search for these gaps.
How can you tell that the company has outgrown the package?
A package does not become too narrow overnight; the signs come one after another. The most common are:
- A client or a tender asks for a higher amount than the package's liability limit, for professional or product liability, or for territorial scope abroad – a package typically covers Hungary.
- The financier (a bank or leasing company) expects an assignment and cover for the machine's full value, possibly also machinery breakdown cover – the package's limit or range of modules cannot provide this.
- Because of a seasonal stock peak or rising prices, the sum for a property group has slipped below the actual value – this is underinsurance, with proportional (average) settlement in a package too.
- A unique, expensive machine, a server park or a production line has appeared, for which the package's equipment sum and sub-limits are not sized.
- A second site, a rented warehouse, work carried out at clients' premises, third-party goods in the workshop – here the package's insured location and its rule on third-party property are typically narrow.
- Headcount and turnover have grown: some packages may set a size threshold (turnover, sum insured) for who can take them out, and growth may cross it – this is also a change that must be notified.
- There was a loss and the limit did not cover it – the most expensive sign, but the most common one.
The article on growth covers how growth and cover should move together; I would only add here that each of the signs above is also a matter of the duty to notify changes under Section 6:452 of the Hungarian Civil Code (Ptk.) – Hungarian package conditions typically specify changes in property value, insured location, activity and loss prevention systems, and set a time limit for notifying them.
A bespoke contract: what does it offer, and what does it ask for?
A bespoke corporate contract is the reverse of a package: the starting point is not the insurer's pre-set framework but the company's actual risk. A site survey or a detailed data sheet, sums agreed for each property group, limits and clauses tailored to the company (third-party goods, equipment off site, tenant's improvements, business interruption sized to the company's gross profit), a scope of liability cover and a limit written for the activity, and several insurers competing on the same criteria – the article on reading quotation tables covers this. What it asks for: more data, more time, and minimum requirements that differ from insurer to insurer – not every company can obtain it from every insurer. Two things are worth seeing clearly. A bespoke contract is not automatically ‘better’: for a small office, a package is often just enough, and a bespoke policy would only add paperwork. And the solution is rarely either-or: in practice, many companies keep the property package and take out bespoke liability insurance or machinery breakdown cover alongside it; in other cases the property goes into a bespoke contract and the package's liability module remains. Comparison is made easier by the fact that, since the EU rules were introduced, non-life insurance products come with a standardised insurance product information document (a document structured as ‘what is insured – what is not insured – are there any restrictions’): a package's product information document shows you in a few pages where the walls are, before you read the conditions through.
What should the company do?
Get out your policy and, instead of looking at the premium, look at three lists: the limits table, the list of uninsurable property and activities, and the scope of the liability module. Compare them with the company's current figures – stock value, the replacement-as-new value of the machines, turnover, headcount, sites – and with the contractual requirements set by clients and financiers. Where a figure or a requirement goes above a wall of the package, a decision is needed: raising the package's cover if the conditions allow, an additional bespoke contract, or a complete switch. This is worth doing once a year, typically before the renewal date, when a change can be fitted in with the fewest uncovered days; the renewal notice is sent by the insurer. If you let me know before the renewal date, I prepare the comparison of the package and the bespoke quotes, and the paperwork – the decision and the signature remain the company's. I can show you the walls; what the insurer pays for is determined by your contract.
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Sources
- Hungarian Civil Code (Ptk.) – Act V of 2013, Section 6:452 (duty of disclosure and duty to notify changes)
- UNIQA Perfekt property and business interruption insurance conditions (24 March 2026) – module structure (FLEXA, EC, all risks, add-ons), 1.6–1.7 sum insured and indemnity limit, 2.2 uninsured property, 2.6.2.4 and 2.6.2.11 sub-limits, 1.4.1 notification of changes (example of policy conditions)
- Generali Vagyonőr property insurance conditions for businesses (VVF, 26 October 2018) – risks not accepted in the package (vacant buildings, disused equipment, dead stock) (example of policy conditions)
- Commission Implementing Regulation (EU) 2017/1469 – standardised presentation format for the insurance product information document (IPID)
