Ch. 13 exam Businessowners Coverage Form

After a storm, ABC Bakery suffers the following losses: $500 in damage to a free-standing sign, $500 in damage to a fence, and $1,500 in damage to a decorative Japanese maple tree. How much will ABC Bakery's BOP pay for these losses if the policy includes an Outdoor Property extension?

$2,000 The BOP's coverage extension will pay the full cost of the non-attached sign and the fence. The tree would only be covered up to $1,000.

Within what time period from the date of the injury must a medical expense be incurred in order for medical payments coverage to apply under BOP liability?

1 year Medical expenses for bodily injury caused by an accident on the insured's premises or due to the insured's operations must be incurred within one year of the date of the accident.

A Businessowners policy will cover the actual loss of business income after a loss for up to:

12 months Coverage for the actual loss of business income, as provided by the Business Income Additional Coverage, will apply for lost income sustained during the period of restoration and within 12 consecutive months after the date of the loss. This same time frame applies to coverage provided by the Extra Expense Additional Coverage.

For how many hours after the first tremor would earth movement damage be covered under the Earthquake Endorsement attached to a Businessowners policy?

168 hours Coverage extends for 168 hours after the first tremor, even if the policy expired.

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?

25% The Businessowners policy includes a 25% automatic seasonal increase to the limit applying to business personal property if the insured maintains insurance equal to 100% of the average monthly values for the preceding 12 months.

Motels may not be insured by a Businessowners policy if they exceed:

3 stories Eligible motels are limited to three stories in height and may not be seasonal in operation. They are not limited by total area.

The Businessowners Coverage Form covers property temporarily stored in another location to protect it from a covered peril for how many days?

30 days The Preservation of Property Additional Coverage provides open perils coverage up to 30 days for property while being moved or temporarily stored at another location in order to save or protect it from a covered peril.

The period of restoration applying to business income coverage under the BOP begins:

72 hours after a direct physical loss Under the Business Income Additional Coverage, loss of business income after a direct physical loss is covered during the period of restoration, which begins 72 hours after the loss. The period ends on either the date when property should be repaired or the date business is resumed at a new, permanent location, whichever occurs first.

Which of the following properties would not be eligible for a Businessowners policy?

A dry cleaning plant that has a total of 45,000 square feet In general, businesses that generate sales over $6 million or that occupy more than 35,000 square feet of space are ineligible for coverage under the BOP. However, some businesses have different, specific eligibility requirements. An office building is eligible as long as it does not exceed 100,000 square feet or 6 stories in height. Residential condominium associations and apartment buildings are eligible.

Under the BOP, the additional coverage for preservation of property is covered in which of the following ways?

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.

Who of the following is not considered an insured under a Businessowners policy?

Anyone driving the named insured's mobile equipment on public roads, without the named insured's permission People driving the named insured's mobile equipment, with or without permission, are not necessarily considered insureds. The named insured's employees, volunteer workers, real estate manager, and legal representative are all considered insureds.

Liability coverage under the BOP includes coverage for:

Bodily injury or property damage Property damage to impaired property, the recall of products, and bodily injury to employees are all exclusions under the Businessowners Coverage Form Section II - Liability.

Section II of a Businessowners policy provides the same liability coverage as a:

Commercial General Liability policy The liability coverages available on the BOP are the same as those provided by the CGL policy, including coverage for premises and operations exposures, personal and advertising injury liability, products and completed operations exposures, and medical payments coverage.

In which section of the BOP would coverage for outdoor property, including satellite dishes and outdoor fences, be found?

Coverage Extensions Coverage Extensions add to the policy limits for certain types of property, including newly acquired property, personal property off-premises, outdoor property, personal effects, valuable papers and records, and accounts receivable.

Which type of loss does not reduce an aggregate limit within the Businessowners Coverage Form - Section II?

Damage to Premises Rented to You The aggregate limits do not apply to losses that involve Damages to Premises Rented to You.

Which coverage is not automatically included in a standard Businessowners policy?

Direct damage caused by the interruption of utility services The Utility Services - Direct Damage coverage must be added by endorsement. Business income and extra expense coverages are automatically included as Additional Coverages in Section I.

All of the following are true of a Businessowners Coverage Form, except:

Employee dishonesty is automatically included in each policy Employee Dishonesty is not automatic. It is an option that must be selected.

Which coverage is not automatically provided by the Businessowners Coverage Form as an Additional Coverage?

Equipment breakdown protection Equipment Breakdown Protection is an Optional Coverage, not an Additional Coverage.

Which form would cover a business owner who operates out of a temporary location during restoration?

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 would be an eligible risk under the BOP?

Fast food restaurant Fast-food restaurants and others with limited cooking are eligible.

A loss caused by which of the following would be automatically covered under a Businessowners policy?

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. Equipment breakdown coverage is available as an Optional Coverage, meaning the insured must add that coverage to the policy, unlike the Additional Coverages, which are provided automatically. Earth movement and off-premises power failure are exclusions.

Which statement is true about the BOP Hired Auto and Non-Owned Auto Liability Endorsement?

It adds business auto coverage for a vehicle the insured rents This endorsement adds business auto coverage to the BOP, but only for vehicles the insured hires, leases, and doesn't own.

Which of the following is true regarding business personal property under a BOP?

It is covered when located in or on the building at the described premises, or in the open within 100 feet of the premises Business personal property is covered while in or on the building at the described premises, or in the open or in a vehicle within 100 feet of the premises.

The Employee Dishonesty Optional Coverage available on the BOP covers which of the following?

Loss to business 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 others. The insured's business personal property, money, and securities are protected against employee theft and other forms of dishonesty.

Under a Businessowners policy, if an insured acquires a building on April 1st, it is automatically covered until which date?

May 1st Newly acquired or constructed property is a policy coverage extension covering each new building up to $250,000 for up to 30 days.

The BOP's Money and Securities Optional Coverage will cover:

Money and securities against theft, disappearance, or destruction The Money and Securities Optional Coverage is necessary to provide coverage for these items, since money and securities are listed as property not covered under the policy proper. Losses caused by employee dishonesty are covered by the Employee Dishonesty Optional Coverage.

When a proper entry is made on the Declarations page of a Businessowners policy, the Outdoor Signs Optional Coverage would cover all outdoor signs:

On an open perils basis The Outdoor Signs Optional Coverage provides coverage on an open perils basis for all outdoor signs at the described premises. This is beneficial because it would remove the limitations seen with the BOP's automatic coverage for attached signs up to a certain limit and coverage for outdoor signs as a Coverage Extension up to a certain limit.

In which section of the BOP would coverage for equipment breakdown be found?

Optional Coverages The BOP offers equipment breakdown coverage under the Equipment Breakdown Protection Optional Coverage. Other Optional Coverages include Outdoor Signs, Money and Securities, and Employee Dishonesty. Optional Coverages must be selected by the insured and indicated on the Declarations page, and they are not automatically provided by the BOP.

Which statement regarding medical expenses coverage under Section II of the Businessowners Coverage Form is not correct?

Payments are made to insureds or people the insured hires to do work Medical expenses payments do not apply to persons hired to work, such as an independent contractor, or an insured. Payments are made to others, including volunteer workers. Expected or intended injuries (including property damage) are excluded, and this does not include bodily injuries resulting from the use of reasonable force to protect people or property.

The Damage to Premises Rented to You coverage under the Businessowners Policy is subject to which of the following limits of liability?

Per fire limit A per fire limit applies to Damage to Premises Rented to You.

Under a Businessowners policy, medical expenses coverage:

Provides coverage without regard to negligence Medical expenses coverage pays for reasonable medical expenses to an injured party, regardless of fault. In other words, the insured does not have to be found legally liable by a court in order for medical expense coverage to apply.

The Businessowners Policy will cover damage to the building on which settlement basis?

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.

Which statement is false regarding the Businessowners Policy?

Supplementary Payments include first aid expenses First aid expenses are covered under Medical Expenses, not Supplementary Payments.

Which of the following is covered as business personal property under the BOP?

Tenant's improvements and betterments Improvements and betterments include additions made a part of the building that the tenant-insured occupies but does not own, including structures that the tenant made at their expense but cannot legally remove. Permanently installed machinery equipment is considered part of the building. Personal property used to maintain or service a structure or premises, like outdoor furniture and carpeting, is covered by building coverage.

Which of the following best describes the purpose of the Protective Safeguards Endorsement available for Businessowners policies?

The insured is required to maintain the safeguards listed in the endorsements such as automatic sprinkler systems or security services Because the presence of protective safeguards reduces the policy premium, the insurer stipulates that they must be maintained in working order. If systems are not maintained or a required notice is not provided, the insurer will not cover a fire loss.

The spouse of which of these persons is not considered an insured under Section II of the BOP?

Trustee When a sole proprietorship, joint venture, or partnership is designated on the BOP's Declarations page, spouses of named insureds are automatically considered insured parties. Spouses of trustees are not considered insureds.

An unendorsed Businessowners policy will pay no more than what amount for the theft of jewelry?

$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 for any one loss.

Under the Earthquake Endorsement to the BOP, if an earthquake begins before the policy expiration, coverage continues for up to how many hours?

168 The Earthquake Endorsement provides that one or more earthquake shocks occurring within 168 hours will be considered a single earthquake.

Which of the following is not an exclusion under Section II of the Businessowners Coverage Form?

Medical payments to volunteer workers The policy does not exclude medical payments to a volunteer worker, only to a paid employee.

The Businessowners Coverage Form typically provides coverage on basis?

Open perils The standard BOP provides open perils coverage, but an endorsement is available to provide named perils coverage instead.

The spouse of which named insured is not eligible as an insured under the BOP?

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.

Which of the following is not eligible for coverage under a Businessowners policy?

Auto dealerships Businesses operating in the sale, servicing, or storage of automobiles are not eligible for a Businessowners policy.

Which statement is false regarding the Businessowners Policy?

First aid expenses are included in Supplementary Payments First aid expenses are covered under Medical Expenses, not Supplementary Payments.

All of the following statements regarding medical expenses coverage under the BOP are correct, except:

Funeral expenses are not covered as medical expenses Medical expenses coverage pays necessary medical, surgical, X-ray, and dental services, including prosthetic devices, as well as necessary ambulance, hospital, professional nursing, and funeral expenses. Expenses related to first aid administered at the time of the accident are also covered.

Which of the following would be eligible for a Businessowners policy?

Funeral home A funeral home is included as an eligible risk as a service business.

The Outdoor Property Coverage Extension available on a Businessowners policy will not pay for which of the following?

Growing crops The Outdoor Property Coverage Extension extends coverage to outdoor radio and television antennas (including satellite dishes), outdoor signs that are not attached to the building, trees, shrubs, plants, and fences. However, covered property does not include growing crops. This extension provides up to $2,500 of coverage, with a $1,000 sublimit for any one tree, shrub, or plant.

Which of the following is true regarding the BOP's Time Element Utilities Services Endorsement?

It pays for loss of business income or extra expense at the described premises caused by the interruption of service at the described premises The Utilities Services Endorsement contains coverage for both direct and indirect damages. The indirect damage coverage includes business income and extra expense coverage.

The Businessowners Coverage Form includes business liability coverage for the insured's:

Liability assumed under an insured contract Business liability coverage provided by Section II of the BOP includes liability assumed under an insured contract. If the contract is not considered an insured contract, liability arising out of it is excluded by the BOP. Employers liability, liquor liability, and auto liability are all covered only on separate policies.

Which of the following is not an Optional Coverage under the Businessowners Policy?

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.

All of the following are Optional Coverages under the Businessowners Policy, except:

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 not an optional coverage.

Which statement regarding the Businessowners Policy is not correct?

The Damage to Premises Rented to You limit is written on a per person basis Damage to Premises Rented to You is written on a per occurrence (fire or explosion) basis.

Which of the following statements about the limits of liability under Section II of the BOP is NOT correct?

The Products-Completed Operations Aggregate limit is equal to the Liability and Medical Expense limit The Products-Completed Operations Aggregate limit is twice the Liability and Medical Expense limit. The same is true for the General Aggregate limit.

Which statement about the Hired Auto and Non-owned Auto Endorsement available for Businessowners policies is correct?

The endorsement adds business auto coverage for a vehicle the insured rents This endorsement adds business auto coverage to the BOP, but only for certain vehicles that the insured does not own.

Business liability coverage provided by a Businessowners policy would cover which of the following?

The insured is sued for injury to a competitor caused by an advertisement Business liability coverage includes coverage for bodily injury, property damage, and personal and advertising injury due to an offense arising out of the insured's business. Product recall, breach of contracts that are not insured contracts, and employee injury are excluded.

A Businessowners policy would cover which of the following?

The insured is sued for injury to a competitor caused by one of their advertisements Businessowners liability coverage includes bodily injury, property damage, medical expense, and personal and advertising injury which would cover injury due to an offense arising out of the insured's business.

Which statement is true regarding inspections and surveys under the BOP?

The insurer has the right, but is not obligated, to make inspections and surveys at any time Inspections and surveys are underwriting tools of the insurer, so they may be made whenever necessary in the judgment of the insurer. These inspections are not health or safety inspections.

Under the BOP, the Money and Securities Optional Coverage would cover which of the following?

Theft of contracts representing money The Money and Securities Optional Coverage protects the insured's money and securities against theft, disappearance, and destruction. This does not include losses committed by employees, as employee theft and other instances of employee dishonesty are covered by the Employee Dishonesty Optional Coverage. Accounts receivable are covered by a Coverage Extension.

Under the BOP, what is the insurer's obligation following a loss when other insurance is written with exactly the same basis?

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.