Ch 13 Businessowners Coverage Form
The unendorsed Businessowners Policy will pay no more than what amount for the theft of jewelry? A $5,000 B $7,500 C $3,500 D $2,500
D $2,500 The theft of jewelry, watches, pearls, precious and semi-precious stones, bullion, gold, silver, platinum, and other precious alloys or metals is limited to $2,500 in any one loss.
The BOP generally has a base deductible that ranges from: A $1,000 to $5,000 B $750 to $2,500 C $1,000 to $2,500 D $500 to $2,500
D $500 to $2,500 The BOP has a deductible that ranges from $500 to $2,500.
Which coverage is not included in a standard Businessowners Policy? A Business Income and Extra Expense B Automatic 8% increase for Buildings C Seasonal increase of 25% D 72 hours Direct Damage from Utility Services
D 72 hours Direct Damage from Utility Services The Utility Services Direct Damage coverage must be added by endorsement.
An unendorsed BOP with no optional coverages covers which of the following properties? A Money and Securities B Automobiles used in the business C Motor trucks that deliver the insured's goods D Completed additions
D Completed additions Completed additions, as well as additions under construction, including materials and supplies are covered if not otherwise insured under another policy.
The BOP's optional coverage for employee dishonesty covers which of the following? A Dishonest acts of employees directed toward customers, such as giving incorrect change B Misrepresentations of the insured's products or services made by employees C Burglary of the insured's premises by employees D Loss to business or personal property resulting from dishonest acts of employees
D Loss to business or personal property resulting from dishonest acts of employees The Employee Dishonesty Optional Coverage protects the insured from dishonest acts of employees acting alone, or in collusion with other employees.
The minimum liability limits under a BOP are: A $300,000 per occurrence B $500,000 per occurrence C $200,000 per occurrence D $100,000 per occurrence
A $300,000 per occurrence
Under a BOP, the insurer may examine and audit the insured's books and records at any time during the policy period and up to what duration after policy expiration? A 3 years B 1 year C 5 years D 7 years
A 3 years
Which of the following risks is not eligible for coverage under the Businessowners policy? A A 10-story office building B A wholesaler with 25% of the floor space open to the public C An apartment building of any size D A construction company with $300,000 total annual payroll
A A 10-story office building Office buildings that are occupied primarily for office purposes that do not exceed 6 stories in height or 100,000 square feet in total floor area are eligible for the BOP.
Which of the following is not an exclusion under Section II of the Businessowners Coverage Form? A Medical payments to volunteer workers B Employers Liability C Watercraft Liability D Professional Liability
A Medical payments to volunteer workers The policy does not exclude medical payments to a volunteer worker, only to a paid employee.
A BOP is written with an Occurrence limit of $300,000 and an Aggregate limit of $600,000. Following a $50,000 loss, what are the remaining limits? A $250,000 Per Occurrence and $550,000 Aggregate B $300,000 Per Occurrence and $550,000 Aggregate C $300,000 Per Occurrence and $650,000 Aggregate D $250,000 Per Occurrence and $500,000 Aggregate
B $300,000 Per Occurrence and $550,000 Aggregate This occurrence does not impact the next occurrence and its per occurrence limit. It does Impact the General Aggregate limit and reduces it with each occurrence. The aggregate is the bank, once exhausted, no limits remain, you must restore the limits.
The BOP covers property while it is being temporarily stored in another location for how many days? A 15 B 30 C 10 D 60
B 30
Which of the following is true regarding the BOP's Time Element Utilities Services Endorsement? A It pays for loss to overhead transmission lines indicated in the schedule B It pays for loss of business income or extra expense at the described premises caused by the interruption of service at the described premises C It pays for loss to covered property caused by interruption of service D It increases the limit of insurance by the amount shown in the endorsement
B It pays for loss of business income or extra expense at the described premises caused by the interruption of service at the described premises
All of the following businesses would be eligible for a BOP, except: A Motels that are 3 stories in height or less that do not contain a bar or cocktail lounge B Wholesalers operating with 50% of its floor space and 50% of its gross sales coming from retail operations C Limited cooking restaurants with seating limited to 75 persons or Fast food restaurants with seating limited to 150 and less than 25% of gross sales on beer and wine D Convenience Food/Gasoline Stores that generate less than 75% of its total gross sales in the sale of gasoline
B Wholesalers operating with 50% of its floor space and 50% of its gross sales coming from retail operations Wholesalers are limited to 25% of their floor space and sales to retail operations. All of the other choices are within the eligibility guidelines.
Under the BOP, if coverage for business property equals 100% of the average monthly values for the preceding 12 months, an automatic increase of what amount is provided to offset seasonal variations in stock values? A 5% B 15% C 25% D 10%
C 25% The Businessowners Policy includes an automatic seasonal increase business personal property of 25% if the insured maintains insurance equal to 100% of the average monthly values for the preceding 12 months.
Section III of the Businessowners Coverage Form includes: A Applicable endorsements B Liability related coverages C Common Policy Conditions D Property related coverages
C Common Policy Conditions Section III of the Businessowners Coverage Form includes the Common Policy Conditions.
If a fire occurs, which of the following does a BOP provide coverage? A Property the insured owns that is used in the insured's business B Business personal property located in or within 100 feet of the covered buildings C Property of others that is in the insured's care, custody, or control D All of the answers listed
D All of the answers listed Property owned by the insured, Property of others in the insured's care, and Business personal property within 100 feet of the building is all covered.
All of the following are true of Section II of the Businessowners Coverage Form, except: A Bodily injury coverage does not apply to rendering or failure to render professional services B Includes the cost of defending the insured C A personal injury loss must be committed in the coverage territory during the policy period D Business liability coverage applies to damage to an insured's property or work
D Business liability coverage applies to damage to an insured's property or work Property damage liability does not apply to any property the insured owns, rents, or occupies. Property damage liability is third party coverage, not first party.
Which coverage is not an Additional Coverage under the Businessowners Coverage Form? A Business income and extra expense B Pollutant clean up and removal C Increased cost of construction D Equipment breakdown
D Equipment breakdown Equipment Breakdown is an Optional Coverage, not an Additional Coverage.
Which form would cover a business owner who operates out of a temporary location during restoration? A Business Income B Contingent Business Interruption C Expediting Expenses D Extra Expense
D Extra Expense This provides coverage for extra expenses, such as operating out of a temporary location for up to 12 months after the date of physical loss or damage.
Which of the following businesses is NOT eligible for a BOP? A Coffee shop B Condominium association C Jewelry repair shop D Putt Putt Golf fun cente
D Putt Putt Golf fun center Places of amusement such as: Putt Putt Golf, Movie theaters, Bowling alleys, etc. are ineligible. Condominium associations are considered to be Office Buildings, Coffee shop is a limited cooking restaurant, and a Jewelry repair shop is a Service type business and are all eligible.
Which form would cover a business owner who operates out of a temporary location during restoration? A Expediting Expenses B Business Income C Extra Expense D Contingent Business Interruption
C Extra Expense This provides coverage for extra expenses, such as operating out of a temporary location for up to 12 months after the date of physical loss or damage.
Choose the item that is not covered under the BOP. A Insured's property located in common areas B Leased property C Satellite dish located on the premises D Customer's property in the insured's control
C Satellite dish located on the premises Outdoor fences, radio or television antennas, satellite dishes, and its lead-in wiring, masts or towers are excluded under the BOP.
Which of the following is true regarding Extra Expense Coverage under a BOP? A Coverage is for 12 months after the direct loss B There is a monthly limitation equal to 1/12th of the Property Limit of Insurance C Extra Expense coverage is provided until the Property Limit of Insurance is exhausted D Extra Expense coverage is not available to commercial tenants
A Coverage is for 12 months after the direct loss As with Business Income, there is no limit for coverage on Extra Expense that is incurred within 12 consecutive months of the date of the direct physical loss or damage.
Which of the following coverages is not included in either of the Utility Services endorsements? A Direct loss to electronic data B Indirect loss due to Business Income loss C Loss due to interruption of water supply coverage D Direct loss to covered property
A Direct loss to electronic data The Utility Services Direct Damage endorsement covers a direct loss due to the interruption of water supply, and the Time Element version covers Business Income or Extra Expense coverage for the same type of loss.
Which of the following is not an optional coverage under the BOP? A Electronic data B Employee dishonesty C Money and securities D Outdoor signs
A Electronic data Electronic data is an additional coverage, not an optional coverage.
Business personal property moved to a new location to protect it from a covered peril is covered by the BOP for up to how many days? A 120 B 30 C 90 D 60
B 30 The Preservation of Property 'Additional Coverage' will cover property that is temporarily stored at another location for up to 30 days.
Which coverage is not included in a standard Businessowners Policy? A Seasonal increase of 25% B 72 hours Direct Damage from Utility Services C Automatic 8% increase for Buildings D Business Income and Extra Expense
B 72 hours Direct Damage from Utility Services The Utility Services Direct Damage coverage must be added by endorsement.
All of the following are excluded under the BOP, except: A Losses caused by off-premises power failure B Increased cost of construction C Losses caused by earth movement D Losses caused by mechanical breakdown
B Increased cost of construction The Increased Cost of Construction Additional Coverage provides $10,000 coverage for costs incurred to comply with an ordinance or law regulating repairing or replacing damaged building parts.
Which of the following businesses could be eligible for a Businessowners policy? A Mountasia Putt Putt Golf Center B Rest Easy Motel C Wiley's Water Park D Main Street Liquor Lounge
B Rest Easy Motel Motels can be eligible if they meet the requirements. Amusement parks and liquor lounges are considered ineligible under the Businessowners policy.
Within how many days after an insured acquires new business property must the property be added to the BOP policy? A 60 B 45 C 30 D 20
C 30 Newly acquired or constructed buildings with a value up to $250,000 at each building is automatically covered up to 30 days.
Payroll is covered for how long under Businessowners Business Income coverage? A 6 months B Payroll is not covered C 60 days D 12 months
C 60 days Payroll losses are only paid for 60 days, while the loss sustained will be covered for 12 months.
If a fire occurs, which of the following does a BOP provide coverage? A All of the answers listed B Business personal property located in or within 100 feet of the covered buildings C Property of others that is in the insured's care, custody, or control D Property the insured owns that is used in the insured's business
A All of the answers listed
Each of the following is a characteristic of an eligible risk for the BOP, except: A Small business B Manufacturing occupancy C Apartment building D Building occupies 20,000 square feet of area
B Manufacturing occupancy Other ineligible risks include automobile repair or service stations, dealers, garages, places of amusement, and restaurants and bars that do not meet the restaurant eligibility rules.
All of the following are covered under a BOP, except: A Outdoor furniture B Money and securities C Building fixtures, including outdoor fixtures D Permanently installed machinery or equipment
B Money and securities
Which type of coverage does the BOP provide for preservation of property? A Open perils coverage for 10 days B Open perils coverage for 30 days C Named perils coverage for 10 days D Named perils coverage for 30 days
B Open perils coverage for 30 days
Which of the following businesses is NOT eligible for a BOP? A Limited cooking restaurant B Convenience store with 30% of its revenue coming from gasoline sales C Shoe repair shop D General contractor with an annual payroll of $1,000,000
D General contractor with an annual payroll of $1,000,000 Small contractors are eligible as long as their total annual payroll does not exceed $300,000 and their total annual gross sales from contracting does not exceed $3,000.000. All other choices are eligible.
BI/PD Liability coverage under a BOP is: A Per Fire triggered B Per Accident triggered C Per Claim triggered D Per Occurrence triggered
D Per Occurrence triggered BI/PD Liability throughout this book ALWAYS pays on a Per Occurrence basis. Claims made -- applies to completed operations, per accident -- applies in auto, and per fire -- applies in Fire Legal Liability.
Which of the following is not an additional coverage under the BOP? A Forgery or alteration B Business income C Collapse D Personal effects
D Personal effects Personal effects is a coverage extension, not an additional coverage.
Which of the following would be eligible for a Businessowners policy? A Funeral Home B Go-Cart Racing Facility C Credit Union D RV Storage Facility
A Funeral Home A funeral home is included as an eligible risk as a service business.
Under the BOP, the additional coverage for preservation of property is covered in which of the following ways? A Against open for 60 days B Against the broad perils for 30 days C Against open perils for 30 days D Against the broad perils for 60 days
C Against open perils for 30 days The Preservation of Property Additional Coverage covers property while it is being removed or while temporarily stored at another location if the loss or damage occurs within 30 days after the property is first moved. Coverage is provided on an open perils basis.
Which of the following would not be covered under a Businessowners Policy unless specifically activated on the Declarations page? A Employee dishonesty B Fire Department Service Charge C Money Order and Counterfeit Paper Money Coverage D Exterior building glass
A Employee dishonesty Employee dishonesty is one of four Optional Coverages. Optional Coverages apply only if there is an entry on the Declarations page indicating that one or more of them apply.
Under a Businessowners policy, if an insured acquires a building on April 1st, it is automatically covered until which date? A May 1 B April 21 C June 1 D April 10
A May 1 Newly acquired or constructed property is a policy coverage extension covering each new building up to $250,000 for up to 30 days.
Which of the following is not an Optional Coverage under the Businessowners Policy? A Personal property of others that is in the insured's care, custody and control B Outdoor signs C Employee dishonesty D Money and securities
A Personal property of others that is in the insured's care, custody and control Coverage for property that is in the care, custody or control of the insured is considered business personal property and is automatically covered under the policy.
Under a Businessowners Policy medical expenses coverage: A Provides coverage without regard to negligence B Pays sums for which the insured is legally liable C Is written in place of bodily injury D Prohibits further action for recovery after acceptance of payment
A Provides coverage without regard to negligence
Choose the item that is not covered under the BOP. A Satellite dish located on the premises B Leased property C Customer's property in the insured's control D Insured's property located in common areas
A Satellite dish located on the premises Outdoor fences, radio or television antennas, satellite dishes, and its lead-in wiring, masts or towers are excluded under the BOP.
All of the following are true about a Businessowners policy, EXCEPT: A The BOP must be written on an Open Perils basis Only B The BOP is a package policy for small, low risk businesses C Both the Additional Coverages and the Coverage Extensions are earned under a BOP by maintaining 80% insurance to value D The basic BOP deductible is $500
A The BOP must be written on an Open Perils basis Only Named perils can be added by endorsement. 80% coinsurance is not required, but all of the additional coverages and extensions are automatically included (or earned) if you maintain 80% insurance to value (coinsurance).
All of the following are true about the Limits of Liability under Section II of the BOP, except: A The Products and Completed Operations aggregate limit is equal to the Liability and Medical Expense limit B The Medical Expense limit is a per person limit C The Liability and Medical Expense limit applies per person or organization for personal injury claims D The Damage to Premises Rented to You limit applies only to premises rented to the insured
A The Products and Completed Operations aggregate limit is equal to the Liability and Medical Expense limit The Products and Completed Operations aggregate limit is twice the Liability and Medical Expense limit.
Under the BOP, what is the insurer's obligation following a loss when other insurance is written with exactly the same basis? A To pay only after the other insurance coverage is exhausted B To pay 50% of the loss C To pay the full amount of the loss in addition to the other insurance D To pay for a share of the loss according to the limits
A To pay only after the other insurance coverage is exhausted The Other Insurance Condition of the Businessowners Policy states that the policy will pay only for the amount of covered loss or damage in excess of the amount due from the other insurance.
Which of the following is true regarding Business Income Coverage under a BOP? A The monthly limitation is 1/12th of the limit of insurance applying to Buildings B Coverage is provided for up to 12 months after the direct loss, with no limit on the amount of monthly indemnification, and no limit of insurance C Coverage is for 12 months after the direct loss, starting 24 hours after the direct loss D The monthly limitation is 1/12th of the limit of insurance applying to Buildings and Business Personal Property
B Coverage is provided for up to 12 months after the direct loss, with no limit on the amount of monthly indemnification, and no limit of insurance There is no monthly or total limit on the amount of Business Income Coverage and it applies in addition to the limits of insurance provided for direct damage coverages.
The Businessowners policy: A Is always considered the primary carrier in the event there is other collectible insurance B Provides a prepackaged policy of property and liability coverages for certain types of small businesses C Offers more coverages than that of a Commercial Package policy D Provides liability coverage only
B Provides a prepackaged policy of property and liability coverages for certain types of small businesses The Businessowners policy is a prepackaged policy of Property and Liability coverages written only for certain eligible small businesses. The eligibility rules are stricter than those for a CPP.
The Protective Safeguards Endorsement requires which of the following? A The insured must notify the insurer if the automatic sprinkler system is off for more than 72 hours B The insured must notify the insurer if the automatic sprinkler system is off for more than 48 hours C All of the answers listed D The insurance company must pay for a fire loss regardless of whether the insured has notified the company that the required safeguards were suspended or impaired
B The insured must notify the insurer if the automatic sprinkler system is off for more than 48 hours
Under the BOP, which of the following types of property is not covered? A Building materials, equipment or supplies located in the open B Vehicles subject to motor vehicle registration C Tenants improvements made to structures not owned by the tenant D Business Personal Property located outside the building
B Vehicles subject to motor vehicle registration Vehicles subject to motor vehicle registration are eligible for coverage under a commercial automobile policy.
Under the BOP, Additional coverages and the Extensions of coverage: A Must be purchased by endorsement B Are not available with a BOP C Are provided automatically D Are only included if indicated on the declarations page
C Are provided automatically The BOP is a pre-packaged policy that includes many extra coverages automatically if you maintain 80% coinsurance. However, it does not require coinsurance. If you don't maintain it you simply won't have all of the additional coverages. No endorsement is needed for 'Additional Coverages' or 'Coverage Extensions'. Optional coverages are available and must be indicated on the Dec's page.
Which statement about the BOP's Hired Auto and Non-owned Auto endorsement is correct? A It covers personal use of a non-owned vehicle B It changes coverage for owned autos from named perils to open perils C Business auto coverage for a vehicle the insured rents is added to the coverage D Coverage is limited to owned vehicles
C Business auto coverage for a vehicle the insured rents is added to the coverage This endorsement adds business auto coverage to the BOP, but only for vehicles the insured hires, leases, and doesn't own. Employee-owned vehicles are excluded; an employee using his/her own vehicle in the course of the insured's business would have to rely on his/ her own auto insurance for liability coverage.
If there is other collectible insurance, the BOP acts as what type of coverage? A Primary B Over-Insurance C Excess D Pro Rata
C Excess The BOP is always considered to be excess coverage over any other insurance that may cover a loss.
Which of the following would NOT be eligible for a BOP? A Florists shop B Funeral parlor C Gas station D Bakery
C Gas station Gas Stations (Service stations) are considered to be ineligible risks. Only Convenience Food/Gasoline Stores are eligible; however, the annual gross sales from gasoline cannot exceed 75% of the total gross sales.
Which of the following is true regarding the restoration period under the BOP? A It begins 48 hours after the time of the direct physical loss and ends when business income equals the average business income during the 12 months immediately preceding the loss B It begins 48 hours after the time of the direct physical loss and ends when repairs are completed or when business resumes at a new permanent location C It begins 72 hours after the time of the direct physical loss and ends when repairs are completed or when business resumes at a new physical location D It begins 72 hours after the time of the direct physical loss and ends when business income equals the average business income during the 12 months immediately preceding the loss
C It begins 72 hours after the time of the direct physical loss and ends when repairs are completed or when business resumes at a new physical location
The Common Policy Conditions are found in which section of the BOP? A Section I B Declarations Page C Section III D Section II
C Section III The Common Policy Conditions are found in Section III of the Businessowners Coverage Form, and relate both to Section I - Property, and Section II - Liability.
Which of the following is automatically covered under the Businessowners Policy? A Preservation of property up to 60 days B Mechanical breakdown of pressure systems and air conditioners C Signs attached to the building D Off-premises power failure
C Signs attached to the building Signs attached to the building are covered, but the limit of insurance on these signs is $1,000.
Which of the following is false about the Businessowners Policy? A Medical expenses incurred within 1 year of the accident are covered B A real estate manager is considered an insured C The Supplementary Payments limit is a maximum of $2,500 for all expenses incurred by the insurer D Medical expenses provide coverage without regard to negligence
C The Supplementary Payments limit is a maximum of $2,500 for all expenses incurred by the insurer
Choose the correct statement regarding the BOP Protective Safeguards Endorsement. A The policy will not pay for sprinkler damage if the safeguards were impaired for more than 72 hours before the onset of the fire B The endorsement states that modifications to the safeguards may be made only with the permission of the insurer C The insured is required to maintain the safeguards listed in the endorsements such as automatic sprinkler systems, automatic fire alarms and/or security services D The endorsement simply describes the safeguards installed at the premises
C The insured is required to maintain the safeguards listed in the endorsements such as automatic sprinkler systems, automatic fire alarms and/or security services Because the presence of protective safeguards reduces the policy premium, the insurer stipulates that they must be maintained in working order.
Which of the following is true regarding the restoration period under the BOP? A It begins 48 hours after the time of the direct physical loss and ends when repairs are completed or when business resumes at a new permanent location B It begins 72 hours after the time of the direct physical loss and ends when business income equals the average business income during the 12 months immediately preceding the loss C It begins 48 hours after the time of the direct physical loss and ends when business income equals the average business income during the 12 months immediately preceding the loss D It begins 72 hours after the time of the direct physical loss and ends when repairs are completed or when business resumes at a new physical location
D It begins 72 hours after the time of the direct physical loss and ends when repairs are completed or when business resumes at a new physical location The 'period of restoration' begins 72 hours after the time of direct physical loss, and ends when repairs are completed or when business resumes at a new permanent location.
The Businessowners Policy will cover damage to the building on which settlement basis? A Agreed Value B Functional Replacement Cost C Actual Cash Value D Replacement Cost
D Replacement Cost One of the very attractive features of the Businessowners Policy is that it covers both building and contents on a Replacement Cost basis.
After a claim has been paid under the Businessowners Liability Coverage, what happens to the recovery rights? A They belong to the insured B After the deductible is returned to the insured, the rights go to the insurer C They are pro rated between the insurer and the insured D The rights belong to the insurer
D The rights belong to the insurer A policyholder's recovery rights are transferred to the insurer to the extent of the insurer's payments.
The spouse of which of these persons is not an insured covered under the BOP? A Joint venture partner B Partner C Sole proprietor D Trustee
D Trustee In a sole proprietorship, joint venture, or partnership, spouses of named insureds are considered insured parties. Spouses of trustees are not considered an insured.
The resumption of operations condition requires that the insured do which of the following? A Replace damaged property on a reimbursement basis B Submit a proof of loss within 30 days C Return to the building within 60 days D Use damaged property to resume operations
D Use damaged property to resume operations If the insured declines to use property to resume operations after a covered business income loss, the policy will reduce the amount of the business income loss payment for the resumption of operations that should have been made
Coverage A Dwellings provides insurance for the residential dwellings owned and occupied by the insured. It includes attached structures. Coverage B Other Private Structures provides insurance for detached private garages and other private structures. These structures must be used personally - and not for farm purposes. Coverage C Household Personal Property provides insurance for household personal property owned by the insured and family members while on the premises. Coverage D Loss of Use provides insurance for additional living expense and fair rental value. Coverage E Scheduled Farm Personal Property provides insurance for specific types of property if a designation appears on the Declarations for that type of property. This is an itemized list: hay, grain, vehicles, equipment, supplies, machinery, farm products, poultry, livestock, and in some instances will include: portable structures and/or buildings. Coverage F Unscheduled Farm Personal Property provides insurance for all items of farm personal property on the insured location except for those specifically excluded. Coverage is not provided for household or personal property usual to a dwelling (that type of property is insured under Coverage C). Off-premises coverage includes farm machinery, equipment and implements, tools, supplies, feed and livestock EXCEPT while in transport by a contract or common carrier or if located at a public stockyard or sale barn to present stock for sale. Note Coverage F covers farm machinery both on and away from the described premises. It also includes mules, swine, and sheep; but does not include racehorses, poultry, licensed motor vehicles, aircraft, watercraft, birds, or growing crops. A single blanket limit on all Unscheduled Farm Personal Property applies. Coverage G Other Farm Structures provides insurance for described farm buildings and structures and their attached sheds and permanent fixtures including silos, portable buildings and structures; all fences, corrals, and pens (except field or pasture fences); outdoor radio and television equipment, antennas, masts, and towers.
test taking tip Coverages A through D are identical to Homeowners Coverages A through D.
