BUSINESSOWNERS
Which of the following watercraft will NOT be covered by business liability insurance? A Owned watercraft 53 feet long B An auto parked at the insured's premises C Watercraft while on shore at a premises owned by the insured D Nonowned watercraft 50 feet long used for transporting personal property of the insured
A Owned watercraft 53 feet long Correct! Watercraft while on shore at a premises owned by the insured, and nonowned watercraft less than 51 feet long not being used to carry persons or property for a fee will be covered.
Under a businessowners policy, the inspections and surveys condition specifies all of the following EXCEPT A The insurer does not have the right to inspect the insured's property and operations. B The insurer does not make safety inspections for the insured. C The insurer does not guarantee that conditions are safe or healthful. D The insurer does not guarantee that the insured is meeting all required safety regulations.
A The insurer does not have the right to inspect the insured's property and operations. Correct! The inspection and survey condition DOES allow the insurer the right to inspect the property and operations. These inspections are important in determining the insurability of the insured's property and operations, in setting proper insurance rates, and in making loss control recommendations.
The most the insurer will pay for a loss under a businessowners policy is A The limit of insurance after the deductible is paid. B The amount of the loss minus the deductible. C 80% of the loss. D 20% of the loss.
A The limit of insurance after the deductible is paid. Correct! For losses covered under a businessowners policy, the insured must pay a deductible, after which the insurer will pay up to the limit of insurance.
Which of the following is NOT settled on an actual cash value basis while covered under the business property coverage form? A Works of art or antiques B Valuable papers and records C Property of others D Manuscripts
B Valuable papers and records Correct! Valuable papers and records are valued at the cost of blank materials for reproducing the records and labor to copy the records.
Which of the following risks are eligible for coverage under a businessowners policy (BOP)? A Automobile dealers B Bars or taverns C Condominiums D Banks
C Condominiums correct! ISO maintains a list of risks not eligible for consideration for a BOP. Financial institutions, auto dealers, and bars and grills are specifically excluded from coverage.
Which of the following best describes business income? A Net profit or loss that would have incurred, minus normal operating expenses, including payroll, that continues during the suspension B Net profit or loss that would have incurred, minus normal operating expenses, excluding payroll, that continues during the suspension C Net profit or loss that would have incurred, plus normal operating expenses, including payroll, that continues during the suspension D Net profit or loss that would have incurred, plus normal operating expenses, excluding payroll, that continues during the suspension
C Net profit or loss that would have incurred, plus normal operating expenses, including payroll, that continues during the suspension Correct! Business income means the sum of net profit or loss that would have incurred, and normal operating expenses, including payroll, that continues during the suspension. Review ContentNext Question
According to businessowners policy Section I, which of the following is NOT a condition to be met for the terms of the policy to apply to mortgageholders? A The mortgageholder has the right to receive loss payment. B The insurer will pay covered losses or damage to each mortgageholder shown in the declarations. C The mortgageholder must petition the state department of insurance for named status. D If the insurer denies the claim, the mortgageholder may still take steps to receive loss payment.
C The mortgageholder must petition the state department of insurance for named status. Correct! The insurer will pay covered losses or damage to each mortgageholder; the mortgageholder has the right to receive loss payment; and if the insurer denies the claim because of the insured's act or because the insured failed to comply with the terms of the policy, the mortgageholder still will have the right to receive loss payment. Review ContentNext Question
All of the following statements are true regarding fire department service charge additional coverage under the businessowners policy EXCEPT A This coverage is not subject to any deductible. B This coverage provides an additional $2,500 amount of insurance. C This coverage limit pays in place of the limit of insurance shown in the declarations. D This coverage limit is payable in addition to the limit of insurance shown in the declarations.
C This coverage limit pays in place of the limit of insurance shown in the declarations. Correct! The fire department service charge covers charges up to $2,500 and is payable in addition to the limit of insurance shown in the declarations and is not subject to any deductible.
Which of the following is NOT settled on an actual cash value basis while covered under the business property coverage form? A Manuscripts B Works of art or antiques C Valuable papers and records D Property of others
C Valuable papers and records correct! Valuable papers and records are valued at the cost of blank materials for reproducing the records and labor to copy the records.
Under businessowners policy Section I, if an insurer wants to cancel a policy for any reason except nonpayment of premium, how many days before the effective cancellation date must the insurer notify the mortgageholder? A 10 days B 15 days C 20 days D 30 days
D 30 days correct! If an insurer is cancelling a policy for any reason except nonpayment of funds, the insurer must give the mortgageholder at least 30 days' notice, following businessowners policy Section I.
In business income additional coverage in a BOP, the waiting period that must occur before the period of restoration may begin is A 30 hours. B 15 hours. C 45 hours. D 72 hours.
D 72 hours. Correct! For business income coverage, there is no coverage for the first 3 days following the loss. This time deductible was introduced in a 1995 change. The 72-hour deductible can be reduced by an endorsement for an additional premium.
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 A 10% B 25% C 30% D 50%
B 25% correct! The businessowners policy (BOP) contains a seasonal increase provision that automatically increases the limit of insurance for business personal property by 25% if the actual values exceed the limit of insurance. Review ContentNext Question
Which of the following is eligible for a businessowners policy? A A mercantile risk with gross sales of $4 million B A 6-story office building with less than 100,000 square feet total area C An 8-story office building D A convenience store with gas pumps with 60% of gross sales from gasoline sales
B A 6-story office building with less than 100,000 square feet total area Correct! Maximum eligibility requirements for a BOP are: 6 stories high; 25,000 sq.ft. mercantile space in apartment building; 100,000 sq.ft. for the office building; $3 million gross sales.
The pollutant cleanup and removal coverage in the businessowners policy has a limit of A $5,000 in any 6-month period. B $20,000 in any 6-month period. C $10,000 in any 12-month period. D $2,500 in any 12-month period.
C $10,000 in any 12-month period. Correct! The policy limit is $10,000 in any 12-month period if the release was caused by a covered loss during the policy period.
To be eligible for businessowners policy (BOP) coverage, an office building CANNOT be higher than A 2 stories. B 3 stories. C 6 stories. D 10 stories.
C 6 stories. Correct! Office buildings eligible for coverage under BOP may not be more than 6 stories high, and more than 100,000 square feet.
The members of a limited liability company are insureds under a businessowners policy if A A single individual member of the limited liability company is listed as the named insured. B Members of a limited liability company cannot be insureds under a BOP. C The limited liability company is designated as the named insured. D Each individual is listed as a named insured on the policy.
C The limited liability company is designated as the named insured. Correct! If the named insured is designated as a limited liability company, the named insured and members also are insureds, but only with respect to the conduct of the business. Managers are insureds, but only with respect to their duties as managers.
Under the additional coverages of a BOP, property removed to protect it from loss will be covered at another location for up to A 45 days. B 10 days. C 14 days. D 30 days.
D 30 days. Correct! The preservation of property clause extends the policy to protect covered property while it is being moved and for up to 30 days at the new location.
The businessowners policy liability coverage will pay for necessary medical expenses of others incurred within what maximum time period? A 90 days B 120 days C 1 year D 3 years
C 1 year Correct! Medical payments coverage of a BOP will pay medical, dental, hospital, and funeral services incurred within one year from the date of an accident to a person who suffers bodily injury by accident on or next to the insured's premises, or because of the insured's operations.
Which of the following businesses would be eligible for a businessowners policy? A Family Fun Time Amusement Park B Joe's Bar And Grill C Hometown Bank & Trust D Hill & Morton Funeral Home
D Hill & Morton Funeral Home correct! Specifically excluded from eligibility on a BOP are bars and grills, financial institutions, and amusement places.
Under the additional coverages of a BOP, property removed to protect it from loss will be covered at another location for up to A 30 days. B 45 days. C 10 days. D 14 days.
A 30 days. correct! The preservation of property clause extends the policy to protect covered property while it is being moved and for up to 30 days at the new location.
Which of the following watercraft will NOT be covered by business liability insurance? A Owned watercraft 53 feet long B An auto parked at the insured's premises C Watercraft while on shore at a premises owned by the insured D Nonowned watercraft 50 feet long used for transporting personal property of the insured
A Owned watercraft 53 feet long correct! Watercraft while on shore at a premises owned by the insured, and nonowned watercraft less than 51 feet long not being used to carry persons or property for a fee will be covered.
Which of the following limits, shown in the declarations of a policy, applies to medical expenses? A Per injury B Per incident C Per person D Per occurrence
C Per person correct! A combined single limit of insurance is applicable for all bodily injury and property damage losses that arise from a single occurrence. Medical expenses are limited to the per person limit shown on the declarations.
Which of the following would be the insured's duty in the event of a loss according to the duties in event of occurrence, claim or suit condition? A Providing specific details regarding an occurrence B Delivering a claim to the insured in person C Initiating the investigation of a claim D Promptly notifying the insurer of a claim by phone
A Providing specific details regarding an occurrence correct! In the event of a loss, the insured's duties include the following: promptly notifying the insurer of the occurrence (how, when, where, names and address of any injured persons); prompt written notice of a claim; promptly notifying the insurer of any legal papers received related to the loss; and cooperating and assisting in the investigation of a claim.
The businessowners policy liability coverage will pay for necessary medical expenses of others incurred within what maximum time period? A 90 days B 120 days C 1 year D 3 years
C 1 year correct! Medical payments coverage of a BOP will pay medical, dental, hospital, and funeral services incurred within one year from the date of an accident to a person who suffers bodily injury by accident on or next to the insured's premises, or because of the insured's operations.
Following a property loss that is covered under a Businessowners policy, if the insurer and insured cannot agree on the amount of the loss, what method is used to resolve the issue? A Adjudication B No-fault procedure C Appraisal D Arbitration
C Appraisal correct! The appraisal clause provision allows an insured and insurer that cannot reach an agreement on the amount of a loss settlement to each select its own appraiser. The appraisers then select a disinterested umpire. Disagreements between the appraisers are settled by the umpire. The umpire's decisions are usually binding on both parties.
After a loss, an insured covered by a business property coverage is NOT required to A Send the insurer a sworn proof of loss within 60 days. B Take all reasonable steps to protect property from further damage. C Reconstruct for the insurer a timeline of activities leading up to the loss for use in an investigation. D Resume business operations as soon as possible.
C Reconstruct for the insurer a timeline of activities leading up to the loss for use in an investigation. Correct! Although the insured IS required provide a description of how, when, and where the loss or damage occurred, there is no demand for a timeline leading up to the loss.
The inspections and surveys condition in a businessowners policy A Validates that the insured is in compliance with state and federal guidelines. B Obligates the insurer to make annual safety inspections. C Guarantees that all working conditions are safe and healthful. D Allows the insurer the right to inspect the insured's premises.
D Allows the insurer the right to inspect the insured's premises. correct! The inspections and surveys condition gives the insurance company the right to inspect the insured's premises and operations at any reasonable time during the policy period. Inspections and surveys are not required. This condition does not make safety inspection, nor does it guarantee that the conditions are safe, healthful, or meet safety regulations.
The liability coverage of the businessowners policy is written on a A Policyowners liability coverage form. B Aggregate liability coverage form. C Homeowners liability coverage form. D Businessowners liability coverage form.
D Businessowners liability coverage form. Correct! The liability coverage of the businessowners policy is written on a businessowners liability coverage form and generally applies to all operations and premises owned or operated by the insured.
An advertising company has its annual holiday party for employees and customers, after which a customer who had too much to drink is involved in an automobile accident. Occupants of the other car involved in the accident sue the company for serving the customer too much alcohol. Will the company's businessowners policy provide coverage? A Yes, none of the exclusions will apply. B Yes, employer liability obligates the company to pay. C No, accidents outside the company premises are not covered. D No, liquor liability is excluded.
A Yes, none of the exclusions will apply. correct! The liquor liability exclusion applies only to insureds in the business of manufacturing, distributing, selling, serving, or furnishing alcoholic beverages. In this case, the company's businessowners policy most likely will have to pay.
Under the examinations of books and records condition, the insurance company has the right to examine and audit the insured's books and records related to the policy ADuring the policy period and for up to 5 years after the termination of the policy. B Only after the policy period. C During the policy period and for up to 3 years after the termination of the policy. D Only during the policy period.
C During the policy period and for up to 3 years after the termination of the policy. correct! Any time during the policy period and for up to 3 years after the termination of the policy, the insurer may examine the books and records.
Which of the following is NOT an optional coverage available in a BOP? A Mechanical breakdown B Employee dishonesty C Workers compensation D Outdoor signs and exterior-grade floor glass
C Workers compensation correct! Workers compensation is a different type of insurance.
A BOP (businessowners policy) is most similar to A Auto. B Umbrella. C Cargo. D Homeowners.
D Homeowners. Correct! The BOP is most similar in structure to the personal lines homeowners policy because both require that the policy provide property insurance and liability insurance in a single policy.
Which of the following is defined as a covered cause of loss in businessowners property coverage? A Rain B Smoke from agricultural smudging C Pollution D Leakage from fire-extinguishing equipment
D Leakage from fire-extinguishing equipment correct! Only leakage for fire-extinguishing equipment is defined as a covered loss. The other causes are specifically excluded from coverage.
Which of the following is NOT an optional coverage available in a BOP? A Outdoor signs and exterior-grade floor glass B Mechanical breakdown C Employee dishonesty D Workers compensation
D Workers compensation Correct! Workers compensation is a different type of insurance.
Which of the following is eligible for a businessowners policy? A A 6-story office building with less than 100,000 square feet total area B An 8-story office building C A convenience store with gas pumps with 60% of gross sales from gasoline sales D A mercantile risk with gross sales of $4 million
A A 6-story office building with less than 100,000 square feet total area correct! Maximum eligibility requirements for a BOP are: 6 stories high; 25,000 sq.ft. mercantile space in apartment building; 100,000 sq.ft. for the office building; $3 million gross sales. Review ContentNext Question
In addition to the common policy conditions, all the following apply to liability coverage EXCEPT A Employers liability. B Separation of insured. C Legal action against insurer. D Bankruptcy.
A Employers liability. correct! The following conditions apply to the liability coverage in addition to the common policy conditions: bankruptcy, duties in event of occurrence, claim or suit, legal action against the insurer, and separation of insured. Employers liability is an exclusion.
All of the following would be covered under the medical expense coverage of a businessowners policy EXCEPT A Mental health counseling. B Ambulance services. C X-ray services. D First aid when the accident occurred.
A Mental health counseling. Correct! This coverage includes accidental bodily injury only; it does not cover any counseling.
Coverage territory of the businessowners policy (BOP) includes all of the following EXCEPT A Mexico. B Canada. C Puerto Rico. D The United States.
A Mexico. correct! Coverage territory includes the United States of America (including its territories and possessions), which includes Puerto Rico, and Canada.
The pollutant cleanup and removal coverage in the businessowners policy has a limit of A $10,000 in any 12-month period. B $2,500 in any 12-month period. C $5,000 in any 6-month period. D $20,000 in any 6-month period.
A $10,000 in any 12-month period. correct! The policy limit is $10,000 in any 12-month period if the release was caused by a covered loss during the policy period.
Under businessowners policy Section I, if an insurer wants to nonrenew a policy, how many days before the expiration date must the insurer notify the mortgageholder? A 10 days B 15 days C 20 days D 30 days
A 10 days correct! If an insurer will not be renewing a policy, according to businessowners policy Section I, it must notify the mortgageholder at least 10 days before the policy expires.
After a loss, an insured covered by a business property coverage is NOT required to A Reconstruct for the insurer a timeline of activities leading up to the loss for use in an investigation. B Resume business operations as soon as possible. C Send the insurer a sworn proof of loss within 60 days. D Take all reasonable steps to protect property from further damage.
A Reconstruct for the insurer a timeline of activities leading up to the loss for use in an investigation. correct! Although the insured IS required provide a description of how, when, and where the loss or damage occurred, there is no demand for a timeline leading up to the loss.
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? A The coinsurance formula would apply B Nothing because the company failed to carry the required insurance amount C Up to $300,000 for the loss D Up to $150,000 for the loss
A The coinsurance formula would apply correct! If the property is not insured to 80% of the full replacement value, the policy will pay the greater of ACV or the coinsurance formula: amount carried / amount that should be carried x amount of loss = amount paid
Under a businessowners policy, the inspections and surveys condition specifies all of the following EXCEPT A The insurer does not have the right to inspect the insured's property and operations. B The insurer does not make safety inspections for the insured. C The insurer does not guarantee that conditions are safe or healthful. D The insurer does not guarantee that the insured is meeting all required safety regulations.
A The insurer does not have the right to inspect the insured's property and operations. correct! The inspection and survey condition DOES allow the insurer the right to inspect the property and operations. These inspections are important in determining the insurability of the insured's property and operations, in setting proper insurance rates, and in making loss control recommendations.
An advertising company has its annual holiday party for employees and customers, after which a customer who had too much to drink is involved in an automobile accident. Occupants of the other car involved in the accident sue the company for serving the customer too much alcohol. Will the company's businessowners policy provide coverage? A Yes, none of the exclusions will apply. B Yes, employer liability obligates the company to pay. C No, accidents outside the company premises are not covered. D No, liquor liability is excluded.
A Yes, none of the exclusions will apply. Correct! The liquor liability exclusion applies only to insureds in the business of manufacturing, distributing, selling, serving, or furnishing alcoholic beverages. In this case, the company's businessowners policy most likely will have to pay.
A businessowners policy is A A monoline policy. B A self-contained prepackaged policy. C A special policy designed for large and small retail operations. D Part of a commercial package policy.
B A self-contained prepackaged policy. Correct! A businessowners policy is similar in structure to the personal lines homeowners policy except it covers a business exposure for both property and liability losses.
A businessowners policy is A A monoline policy. B A self-contained prepackaged policy. C A special policy designed for large and small retail operations. D Part of a commercial package policy.
B A self-contained prepackaged policy. correct! A businessowners policy is similar in structure to the personal lines homeowners policy except it covers a business exposure for both property and liability losses.
Following a property loss that is covered under a Businessowners policy, if the insurer and insured cannot agree on the amount of the loss, what method is used to resolve the issue? A No-fault procedure B Appraisal C Arbitration D Adjudication
B Appraisal Correct! The appraisal clause provision allows an insured and insurer that cannot reach an agreement on the amount of a loss settlement to each select its own appraiser. The appraisers then select a disinterested umpire. Disagreements between the appraisers are settled by the umpire. The umpire's decisions are usually binding on both parties.
Expenses that an organization would not have incurred if business interruption had not existed are known as A All inclusive expenses. B Extra expenses. C Continuing expenses. D Additional expenses.
B Extra expenses. correct! Extra expenses are expenses that an organization would not have incurred if the business interruption had not occurred. Examples include additional overtime labor costs, or renting a similar building to continue operations as opposed to waiting until the existing building is rebuilt.
Expenses that an organization would not have incurred if business interruption had not existed are known as A All inclusive expenses. B Extra expenses. C Continuing expenses. D Additional expenses.
B Extra expenses. Correct! Extra expenses are expenses that an organization would not have incurred if the business interruption had not occurred. Examples include additional overtime labor costs, or renting a similar building to continue operations as opposed to waiting until the existing building is rebuilt.
A policy condition that states if a policy is broadened with no additional premium, then the expanded coverage automatically will be applied to all policies of the same type is known as A Limit of insurance clause. B Liberalization clause. C Maximum indemnity clause. D Loss control clause.
B Liberalization clause. Correct! The liberalization clause states that if a policy is broadened with no additional premium, then the expanded coverage automatically will be applied to all policies of the same type. Review ContentNext Question
Under a businessowners policy, an insured can cancel the policy A Only after the policy has been in force for 120 days. B Only at the time of policy renewal. C At any time by mailing a written notice of cancellation. D At any time with 10-day advance written notice.
C At any time by mailing a written notice of cancellation. Correct! The insured may cancel the policy at any time by mailing a written notice of cancellation to the insurance company.
Under the examinations of books and records condition, the insurance company has the right to examine and audit the insured's books and records related to the policy A During the policy period and for up to 5 years after the termination of the policy. B Only after the policy period. C During the policy period and for up to 3 years after the termination of the policy. D Only during the policy period.
C During the policy period and for up to 3 years after the termination of the policy. Correct! Any time during the policy period and for up to 3 years after the termination of the policy, the insurer may examine the books and records.
Which of the following businesses would be eligible for a businessowners policy? A Joe's Bar And Grill B Hometown Bank & Trust C Hill & Morton Funeral Home D Family Fun Time Amusement Park
C Hill & Morton Funeral Home Correct! Specifically excluded from eligibility on a BOP are bars and grills, financial institutions, and amusement places.
All of the following statements are true regarding employee dishonesty optional coverage under the businessowners policy (BOP) EXCEPT A Losses result from dishonest acts of any of the insured's employees. B Coverage includes all property, including money and securities owned or held by the insured. C It provides coverage for all employees, even those employees who were terminated in the past 90 days. D It provides coverage for direct loss or damage to business personal property.
C It provides coverage for all employees, even those employees who were terminated in the past 90 days. correct! By definition, an employee covered under the employed dishonesty option coverage is one who is currently employed or who was terminated in the past 30 days.
In addition to the common policy conditions, all the following apply to liability coverage EXCEPT A Separation of insured. B Legal action against insurer. C Bankruptcy. D Employers liability.
D Employers liability. correct! The following conditions apply to the liability coverage in addition to the common policy conditions: bankruptcy, duties in event of occurrence, claim or suit, legal action against the insurer, and separation of insured. Employers liability is an exclusion.
Which of the following limits, shown in the declarations of a policy, applies to medical expenses? A Per occurrence B Per injury C Per incident D Per person
D Per person correct! A combined single limit of insurance is applicable for all bodily injury and property damage losses that arise from a single occurrence. Medical expenses are limited to the per person limit shown on the declarations.
Which of the following would be the insured's duty in the event of a loss according to the duties in event of occurrence, claim or suit condition? A Delivering a claim to the insured in person B Initiating the investigation of a claim C Promptly notifying the insurer of a claim by phone D Providing specific details regarding an occurrence
D Providing specific details regarding an occurrence correct! In the event of a loss, the insured's duties include the following: promptly notifying the insurer of the occurrence (how, when, where, names and address of any injured persons); prompt written notice of a claim; promptly notifying the insurer of any legal papers received related to the loss; and cooperating and assisting in the investigation of a claim.
The cancellation provision in a businessowners policy specifies all of the following EXCEPT A The method of refund of unearned premiums. B The insured's cancellation requirements. CThe insurance company's cancellation requirements. D The method of transferring the owner's rights.
D The method of transferring the owner's rights. Correct! The assignment provision outlines the method of transfer of all or a portion of the policyowner's right under an insurance contract.
Which of the following is NOT settled on an actual cash value basis while covered under the business property coverage form? A Property of others B Manuscripts C Works of art or antiques D Valuable papers and records
D Valuable papers and records correct! Valuable papers and records are valued at the cost of blank materials for reproducing the records and labor to copy the records.
