Businessowners Policy
what is the limit or forgery or alteration coverage in the business owners policy
$2,500
valuable papers and records- cost of research- $10,000 on premises/ $5,000 off premises
$5,000 valuable papers and recored not at the described premises $10,000 available for the cost of research, replace, or restore
Coinsurance Formula
(amount of insurance carried/amount of insurance required) x loss = amount of recovery
Coverage Extensions (BPP)
- Newly acquired and constructed - Personal effects and property of others - Valuable papers and records - Property off-premises - Outdoor property (signs and landscaping)
Property Not Covered
- money and securities -aircraft and vehicles -watercraft while afloat -accounts, bills, and other evidence of debt -computers permanently installed in any aircraft, watercraft, or vehicle (unless being held as stock) -contraband or property in the course of illegal trade or transportation -land, water, crops, or lawns -outdoor fences, radio and television antennas, satellite dishes, detached signs. trees, plants and shrubs -electronic data, except as covered under the electronic data additional coverage and except for the insured's stock of prepackaged software; or -animals (unless owned by others and boarded with the insured
advantages of a prepackaged policy
- property and liability coverage is included in a single, predesigned package - options most frequently needed by small business owners are included or available for a small additional premium - rates for the entire package are extremely favorable because the eligible types of risks usually have a lower potential for loss
Accounts Receivable- $10,000 on premises/ $5,000 off premises
-all amounts due from the insureds customers that the insured is unable to collect -interest charges on any loan required to offset amounts uncollectible pending the insurers payments of these amounts
underwriting criteria imposed by insurers, such as size or income limitations
-office buildings: no more than 6 stories high and up to 100,000 sqft -retail or service businesses: up to $3,000,000 in annual gross sales, and up tp 25,000 soft in floor space -convience stores with gas pumps: no more than 50% of gross sales may come from gasoline sales, and no auto service or auto washing services -fast-food restaurants: up to 7,500 sqft; beer and wine sales are permitted subject to 25% of gross sales
If the actual values exceed the limit of insurance, the businessowners policy (BOP) contains a seasonal increase provision that automatically increases the limit of insurance for business personal property by
25%
Debris removal additional coverage
25% / 180 days / $10,000 coverage is provided for up to 25% of direct loss, plus the deductible if reported within 180 days of the loss or the end of the policy period, whichever is the earliest.
under business owners policy section I, if an insurer wants to cancel a policy for any reason except nonpayment of premium, how many days before the effective cancelation date must the insurer notify the mortgage holder?
30 days
Preservation of Property
30 days removal coverage, provides 30 days coverage for property that is Temporarily removed to protect it from damage
to be eligible for buisnessowners policy (BOP) coverage, an office building cannot be higher than
6 stories office buildings eligible for coverage under BOP may not be more than 6 stories high and more than 100,000 square feet
to be eligible for BOP coverage, an office building cannot be higher than
6 stories and more than 100,000 sqft
In business income additional coverage in a BOP, the waiting period that must occur before the period of restoration may begin is
72 hours
in business income additional coverage in a business owners policy, the waiting period that must occur before the period of restoration may begin is
72 hours Under the business income additional coverage, there is no coverage for the first 3 days following the loss. The 72-hour deductible can be reduced by an endorsement for an additional premium
which of the following is eligible for a business owners policy?
A 6-story office building with less than 100,000 square feet total area maximum eligibility requirements for a buisnesowners policy are 6 stories high, 25,000 sqft mercantile space in apartment building, 100,000 sqft for the office building, and 3 million gross sales.
transfer
A basic principle of insurance under which the risk of financial loss is assigned to another party.
Bankruptcy
A legal process to get out of debt when you can no longer make all your required payments
liberalization
A property insurance clause that extends broader legislated or regulated coverage to current policies, as long as it does not result in a higher premium.
Declarations Page
A section of an insurance policy containing the basic underwriting information, such as the insured's name, address, amount of coverage and premiums, and a description of insured locations, as well as any supplemental representation by the insured.
extra expense
Actual Loss sustained / 12 months / no waiting period
Under a businessowners policy, an insured can cancel the policy
At any time by mailing a written notice of cancellation
CPP
Commercial Package Policy, combines coverage for multiple perils
Newly Acquired or Constructed Property $250,000 for buildings / $100,000 for BPP
Coverage may be extended to cover new buildings to be constructed on the described premises, and newly acquired or constructed property at other locations, limited to $250,000 at each building. Coverage may be extended to cover newly acquired business personal property, limited to $100,000 at each building.
which of the following businesses would be eligible for a business owners policy?
Funeral Home Excluded from eligibility on a business owners policy (BOP) are bars and grills, financial institutions, and amusement places.
when endorsement adds coverage for employee use of automobiles in the insured's business and the insured's use of rented autos if no coverage is provided on a business auto policy?
Hired and non owned auto liability
what does the final premium depend on?
LIMITS SELECTED, DEDUCTIBLES, AND ANY OPTIONAL CHARGES
Pollutant Cleanup and Removal- $10,000/ 12 months/ 180 days
Provides limited coverage for pollutants in land or water, typically $10,000 in the aggregate per location. Must be reported within 180 days.
Fire Department Service Charge
The $2,500 limit is included as an additional amount of insurance, unless a different limit is shown in the Declarations.
personal property off premises -- $10,000
The insured may extend up to $10,000 of the insurance that applies to Business Personal Property to property while it is in the course of transit or at premises the insured does not own, lease, or operate. This extension does NOT cover money, securities, valuable papers and records, or accounts receivables.
Under a businessowners policy, the inspections and surveys condition specifies all of the following EXCEPT
The insurer does not have the right to inspect the insured's property and operations.
Glass Expenses
The policy will pay for the expenses incurred to install temporary plates, board up openings, and to remove or replace obstructions when repairing or replacing glass that is part of a building.
Money Orders and Counterfeit Paper Currency- $1000
The policy will pay up to $1,000 for any one loss resulting from the insured having accepted, in good faith, money orders issued by the post office, bank, or counterfeit paper currency during the regular course of business.
Declarations
The section of an insurance policy containing the basic underwriting information, such as the insured's name, address, amount of coverage and premiums, and a description of insured locations, as well as any supplemental representations by the insured.
Concealment
The withholding of known facts which, if material, can void a contract.
What does BOP being indivisible mean?
There is no separate premium for property and liability
Increased Cost of Construction- $10,000
This additional coverage covers the additional costs required to a comply with building codes when a building is damaged by a covered cause of loss. It is only available for buildings on a replacement cost basis and maximum amount payable is 5% of the building or $10,000.
forgery and alteration
Up to $2,500 for losses that result from altered or forged checks or drafts is also covered to include defense coverage.
Frank's Steaks furnishes meat to steakhouses. An accident on the premises causes the building to lose refrigeration for 32 hours. The state inspectors will not allow the meat in the refrigerating units to be sold for human consumption, and Frank loses $18,500 in disposing of the meat. What coverage under Frank's BOP policy will cover the loss?
Utility service - direct damage
which of the following is eligible for a businessoweners policy?
a 6-story building with less than 100,000 sqft total area
Business Owners Policy (BOP)
a package policy approach to insurance for business firms that meet the eligibility requirements. Introduced in 1976
prepackaged
a policy designed to fit the general needs of a business; insured usually cannot elect to exclude coverage that is automatically provided in the package
monoline
a policy that covers one type of insurance; for example, workers compensation or commercial auto
Business Owners Policy (BOP)
a prepackaged policy designed to fit the needs of the small to medium business
business property coverage form conditions apply in addition to the common policy conditions
abandonment appraisal duties in the event of loss or damage legal action against the insurer loss payment recovered property resumption of operations vacancy
time element loss
an amount of loss that depends on how long it takes to repair or replace the damaged property
businesses that are typically ineligible:
automobile sales and serving operations household personal property and 1-or2- family dwellings -manufacturing operations -places of amusement -bars and grills -financial institutions -certain types of contractors and self-storage facilities
Property covered
buildings, business personal property, or both
personal effects- $2,500
business personal property coverage may extended to apply to personal effects owned by the insured office. The insurer will pay up to $2,500 at each described premises
peril
cause of loss
Collapse
collapse of a building is covered if caused by one of the specified cause of loss: hidden decay, insect or vermin, weight of people or property, or use of defective materials if the collapse occurs during construction.
which of the following risks is eligible for coverage under a buinessoweners policy?
condominiums
business owners policy section I is subject to the 4 general conditions
control of property motgageholders no benefit to bailee policy period, coverage territory
Expenses that an organization would not have incurred if business interruption had not existed are known as
extra expenses
Deductible Does Not Apply To...
fire department service charge fire extinguisher systems recharge expense business income extra expense civil authority coverages
A BOP is most similar to
homeowners
water damage, other liquids. power or molten material damage
if loss or damage is caused by any of these causes of loss, the policy also will pay to tear out and replace any part of the building to make repairs to the system or appliance from which the water or other substance escaped.
true regarding employee dishonesty optional coverage under the business owners policy
it provides coverage for direct loss or damage to business personal property losses result from dishonest acts of any the insured's employees coverage includes all property, including money and securities owned or held by the insured an employee covered under the employee dishonesty optptional coverage is the one who is currently employed or who was terminated in the past 30 days
which of the following is an example of protective safeguard in a business owners policy
loss of business income arising from loss of utility service caused by an insured peril
business income from dependent properties- $5000
loss of business income due to physical loss or damage at the premises of a dependent property caused by a covered cause of loss in the insured's policy is covered up to $5,000
business income- actual loss sustained / 12 months/ ordinary payroll - 60 days/ 72- hour waiting period
loss of business income is included during the period of restoration following a direct loss to covered property. coverage is limited to 12 months following the loss for business income, and 60 days following the direct loss for ordinary payroll
Civil Authority- 72 hours/ 4 weeks
loss of business income. or extra expense that results from action of civil authority that results from action of civil authority that prevents access to the premises due to a direct loss elsewhere also covered.
Typical businesses that are eligible under BOP
office buildings apartments and residential or commercial condos mercantile, processing and service establishments contractors (carpenters, electricians, painters, or plumbers) fast-food or limited cooking restaurants convenience stores
the exclusions found in the business owners property coverage are similar to those already discussed
ordinance or law earth movement governmental action nuclear hazard utility service (power failure) war and military action water (flood, waves, mudflow, and waterborne material) Certain computer-related losses fungi, wet rot, and dry rot except as covered in the additional coverage for fungi, wet or dry rot virus and bacteria electrical apparatus consequential losses smoke, vapor, gas explosion of steam apparatus frozen plumbling dishonesty false pretense exposed property damaged by rain, snow, ice or sleet colla[se pollution neglect expected losses error or omissions installation , testing, repair electrical disturbance continuous or repeated seepage or leakage water weather condition acts or decisions, including failure to act or decide negligent work loss or damage to products resulting from an error or omission business income and extra expense that results from delays or cancellation or a lease accounts recieveable: loss or damage caused by or resulting from alteration, falsification
which of the following limits, shown in the declarations of a policy, applies to medical expenses?
per person
direct damage
physical damage to property that results from the inability to use the damaged property
after a loss, an insured covered by a business property coverage is not required
reconstruct for the insurer a timeline of activities leading up to the loss for use in an investigation
mercantile
relating to trade or commerce; commercial
liability
responsibility under the law
salvageable
something that can be saved
the businessowners rules require
that all buildings and personal property under one ownership be included in the same policy
A company has a businessowners policy on a building with an estimated replacement cost of $300,000. The company carries $150,000 of insurance. If a loss occurs, how much will the insured company be paid?
the coinsurance formula would apply
Outdoor property- $2,500 total/ $1,000 per tree, shrub, plant
the insured may extend the coverage to apply to outdoor radio and television antennas, detached signs and trees if the loss results from fire, lightening, explosion, riot, or civil commotion or aircraft. the insurer will pay up to $2,500 extension, but not more than $1,000 for any one tree, -plant or shrub
Business Personal Property- seasonal increase
the limit for business personal property will be automatically increased by 25% for seasonal fluctuations unless otherwise specified in the declarations.
Building Limit—Automatic Increase
the limit of insurance for the building will automatically be increased annually by 8% or the percentage amount shown in the declarations
extended business income- 30 days
the policy will cover necessary suspension of business operations from the time property is repaired, rebuilt, or replaced and operations are resumed, to the earlier of the date operations are restored to the level that would have existed without the loss, or 30 days after property is repaired, rebuilt, or replaced and operations are resumed
Interruption of Computer Operations-$10,000
the policy will pay up to $10,000 for this coverage unless a higher limit is shown in the declarations
fire extinguisher systems recharge expense- $5000
the policy will pay up to $5000 for the cost of recharging or replacing fire extinguishers if discharged on or within 100 feet of the premises
electronic data - $10,000
the policy will pay up to 10,000 for the cost to replace or restore electronic data that has been damaged by a covered cause of loss. viruses are included as a covered cause of loss for this coverage
limited coverage for fungi, wet rot, and dry rot- $15,000
the policy will pay up tp $15,000 for loss or damage by above. loss must be the result of a specified cause of loss other than fire or lightening
all of the following statements are true regarding fire department service charge additional coverage under the BOP
this coverage limit is payable in addition to the limit of insurance shown in the declarations the coverage is not subject to any deducible the coverage provides an additional $2,500 amount of insurance
