Chapter 4-E: Commercial Package Policies

James works for a contracting company that has a Business Owners Policy in place. One day, James brings his laptop to work and leaves it in the manager's office while he heads out to a jobsite. While he is gone, a fire breaks out and destroys the office, with James' laptop inside. Which coverage extension could cover the loss of James' laptop? A. Personal Effects and Property of Others B. Computer Operation Interruption C. Personal Property Off-Premises D. Electronic Data

A. Personal Effects and Property of Others

Coverage B of the BOP would provide indemnification for damages to all of the following, EXCEPT: A. windows. B. an office copy machine. C. inventory. D. office furniture.

A. windows.

What requirements must Wholesalers and Distributors meet in order to be eligible for a BOP? A. Less than 20% of annual expenditures may involve food service, and less than 10% of building area may be open to the public. B. 25% or less of floor space is available to the general public, and less than 25% of gross income may come from retail sales. C. More than 10% of floor space must be devoted to product storage, and less than 20% of expenditures may involve food service. D. 25% or less of floor space is available to the general public, and less than 50% of gross income may come from retail sales.

B. 25% or less of floor space is available to the general public, and less than 25% of gross income may come from retail sales.

Which of the following is not true about Business Income Coverage, an additional coverage in a Business Owners Policy? A. It provides up to 12 months of coverage. B. It is added by endorsement and increases the premium. C. It protects from loss of income caused by property damage. D. It starts 72 hours after the damage occurred.

B. It is added by endorsement and increases the premium.

All of the following may be considered beneficial characteristics of a Commercial Package Policy, except: A. it has a common Declarations page and a common Conditions page. B. it is a single policy that covers personal and business needs. C. it eliminates coverage gaps. D. it reduces premiums.

B. it is a single policy that covers personal and business needs.

An equipment breakdown endorsement would indemnify the insured for losses related to: A. inoperable non-owned autos. B. malfunctioning refrigeration systems. C. hired autos. D. stored inventory.

B. malfunctioning refrigeration systems.

In a BOP, the General Aggregate Limit is: A. equal to the claims-made limit. B. twice the per occurrence limit. C. twice the claims-made limit. D. twice the Products-Completed Operations Aggregate Limit.

B. twice the per occurrence limit.

Jane owns an aquarium supplies store and purchases a Business Owners Policy to protect her assets. Which of the following protections can Jane expect from her standard BOP with no endorsements? A. Named peril coverage B. Insurance for her company-owned vehicles C. Extra expense coverage D. Malpractice insurance

C. Extra expense coverage

Which of the following is a feature typically found in a Business Owners Policy? A. Coverage for company-owned vehicles B. Malpractice coverage C. Inflation Guard for buildings and structures D. Professional Liability coverage

C. Inflation Guard for buildings and structures

In a BOP, the purpose of Supplementary Payments in conjunction with liability coverage is to: A. make incidental payments to an injured claimant before the final settlement amount is reached. B. cover the cost of additional damage that was discovered after the settlement was paid. C. cover costs associated with defending and investigating a claim against the insured. D. cover a claimant's lost wages after suffering an injury caused by the insured.

C. cover costs associated with defending and investigating a claim against the insured.

The BOP offers liability coverage on a/an _____ basis. A. regressive B. claims-made C. occurrence D. statutory

C. occurrence

Which of the following is TRUE concerning a Business Owners Policy? A. A business owners policy is a good option for large multi-national corporations. B. Business owners policies are popular among large corporate vendors. C. Bars and taverns are eligible for business owners policies. D. A business owners policy offers liability protection.

D. A business owners policy offers liability protection.

Which of the following is NOT one of the requirements that a "Fast Food Restaurant" business must meet in order to qualify for a BOP? A. The restaurant must maintain appropriate fire extinguishing equipment. B. The restaurant may not seat more than 150 people. C. The restaurant must not exceed 7,500 square feet. D. Liquor must not account for more than 25% of total annual sales.

D. Liquor must not account for more than 25% of total annual sales.

All of the following are typically excluded from liability coverage in a BOP, EXCEPT: A. contractual liability/ B. property damage to the insured's products. C. employee injuries. D. damage to premises rented by the insured.

D. damage to premises rented by the insured.

All of the following are covered under Coverage A of a Business Owners Policy, EXCEPT: A. flooring and floor coverings. B. building maintenance equipment, such as fire extinguishers. C. owner's furniture in an apartment that is rented as furnished. D. leased business personal property that must be insured.

D. leased business personal property that must be insured.

Which of the following coverages, when added to a BOP, would cause the premium to increase? A. Equipment Breakdown B. Business Income, Extra Expense C. Inflation Guard D. Pollution Cleanup

A. Equipment Breakdown

What might disqualify a restaurant from purchasing a BOP? A. The restaurant serves liquor. B. The use of microwave ovens. C. The restaurant occupies over 5,000 square feet. D. The restaurant serves beer.

A. The restaurant serves liquor.

Which of the following is NOT a feature of a typical Business Owners Policy? A. Usually Actual Cost Valuation B. Extra Expense coverage C. Built-in inflation protection D. Liability protection for lawsuits from accidents or products

A. Usually Actual Cost Valuation

The purpose of the Increased Cost of Construction coverage in a BOP is to provide coverage for: A. the cost of bringing property up to code after a covered loss. B. the cost of keeping the business running while the covered property is being repaired after a covered loss. C. lost business income while the company's building is under construction after a covered loss. D. damage to the insured's building while under construction.

A. the cost of bringing property up to code after a covered loss.

A processing and servicing company would qualify for a BOP only if they have less than _____ in annual revenues. A. $2 million B. $3 million C. $5 million D. $1 million

B. $3 million

Stan owns ABC Mattress Supply. During a storm, lightning strikes a large tree, causing it to fall through the front of his building, resulting in $23,000 in damages. Which coverage in a BOP would pay for the extraction of the tree from Stan's store? A. Liability coverage B. Debris removal coverage C. Business interruption coverage D. Extra expense coverage

B. Debris removal coverage

The insured carries a BOP policy with protective systems such as a sprinkler system. If the system becomes inoperative, the insured must advise the insurance company of the problem within _______ if the system cannot be restored to working order. A. 60 days B. 30 days C. 48 hours D. 30 hours

C. 48 hours

Which of the following statements regarding Commercial Package Policies (CPP) is TRUE? A. A CPP is an example of a monoline policy. B. A CPP requires a separate declarations page for each coverage. C. A CPP is an elective-based policy. D. Workers' compensation insurance is automatically included with a CPP.

C. A CPP is an elective-based policy.

Which of the following is NOT an example of property eligible for coverage under the Outdoor Property coverage extension in a BOP? A. Fences B. Detached signs C. Trees D. Patio furniture

D. Patio furniture

At the very LEAST, a Commercial Package Policy will contain _______ coverage sections. A. four B. five C. three D. two

D. two