Commercial Property Policies (continued)
What is the BOP deductible for business income?
$0- There is no deductible for fire department service charges, business income, extra expense, or civil authority.
On a businessowners policy consequential loss for income, how long of a period of restoration is covered?
1 year, or 12 months
If a building where loss occurs on the BOP has been vacant for more than 60 days, there will be no coverage for loss by vandalism, sprinkler leakage, (unless precautions were taken against freezing), building glass breakage, water damage, theft or attempted theft, and the insurer will reduce the amount of any other losses covered by the policy by how much?
15%- If a building where loss occurs has been vacant for more than 60 days, there will be no coverage for loss by vandalism, sprinkler leakage, (unless precautions were taken against freezing), building glass breakage, water damage, theft or attempted theft, and the insurer will reduce by 15% the amount of any other losses covered by the policy.
What is the BOP property coverage limitation for apartments?
60 units- BOP property coverage limitations: Apartments of more than 60 units.
Which of the following businesses would more likely be covered by a Business Owner's Policy?
A barber shop. A BOP covers businesses that have a minimal property or casualty exposure to loss. Any business that deals with autos is not a minimal risk business.
What is a business that would use a businessowner's policy (BOP)?
A craft shop in a rented building, A dry cleaner in a building owned by the cleaners- The businessowners policy is used for small and medium businesses with minimal liability risks. It is limited to: Apartments of 60 units or less Office buildings 6 stories or 100,000 square feet or less Stores of $1,000,000 gross sales or 15,000 square feet or less The building that the business is in may either be leased or owned.
Which of these risks would a Businessowner's Policy (BOP) be appropriate?
A fourplex dwelling that contained a barbershop- A BOP is designed for smaller businesses in which the risk of property or casualty loss is minimal compared to larger business operations. Apartments, office buildings, retailers and others are limited to their size from a property prospective. Auto, contractors, restaurants, manufacturers and others are limited because of the casualty risk inherent in them.
Which of the following would use bailee coverage?
An appliance repair shop- Bailees Customer - covers damage to customers' goods while in the possession of the insured, regardless of whether the insured is legally liable for the damage. Not included would be damage to customers' vehicles while being stored or repaired, which would be covered by the Commercial Auto coverage.
Which one of the following coverages would typically not be available in a Businessowner's policy?
Auto- The Businessowner's policy is a package policy containing both property and casualty coverages designed for small to medium size businesses. Auto coverage is usually obtained with a commercial auto policy.
Which of these policies cover losses to both buildings and personal property on a replacement cost basis?
BOP- The BOP valuation is standard replacement cost for both the buildings and business personal property
Coverage "A" of the BOP covers:
Buildings and structures described in the declarations- Coverage A - Building coverage means the buildings and structures described in the declarations. It also applies to completed additions; fixtures, including outdoor fixtures; machinery and equipment which are permanently installed; personal property of the insured in apartments or rooms furnished by the insured as landlord; and personal property of the insured used for service or maintenance of the building or its premises (fire extinguishers, outdoor furniture, floor coverings and appliances used for refrigerating, ventilating, cooking, dish washing or laundering). If not covered by other insurance, building coverage also includes additions under construction, building alterations and repairs, and material, equipment, supplies and temporary structures on or within 100 feet of the premises used for making additions, alterations or repairs to the buildings or structures.
Which of the following is a true statement about a BOP?
Business income coverage is included in the policy- The BOP is a widely used policy that already packages important coverage for most smaller businesses. Although the typical Commercial Property Policy comes standard, ACV, the BOP provides coverage automatically on a replacement cost (RC) basis. Property coverage is quite broad including bailee coverage, business income, extra expense and more.
Coverage "B" of the BOP covers
Business personal property Coverage B - Business personal property applies to property of the named insured located in or on the described building or within 100 feet of the described premises while in a vehicle or out in the open. It includes property owned by the insured and used in the insured's business; property of others in the care, custody or control of the insured; the insured's interest as a tenant in "improvements and betterments" made at the insured's own expense but which cannot be legally removed; and leased property for which the insured has a contractual responsibility to insure. Coverage is limited to the amount for which the insured is legally liable, plus the cost of labor, materials or services furnished by the insured.
The Businessowners policy provides coverage for:
Business property and liability in one policy The Businessowners Policy (BOP) provides uniform property and liability coverage in one policy in the same manner as the Homeowners Policy for homeowners.It is more comprehensive than an individual form in the CPP (Commercial Package Policy) and may provide coverage for many risks that are not necessarily of concern to some insureds.
Which of the following would be covered by inland marine?
Cargo hauled in a truck- Transportation forms insure domestic shipments of property.
According to the nationwide definition, Inland Marine insurance covers all of the following except:
Commercial autos- Inland marine insurance covers four classes of property: Transportation Risks Communication and Transportation Instruments Personal Property Floaters Commercial Property Floaters
A breakdown of equipment is defined as a direct loss to covered equipment that necessitates its repair or replacement as a result of the following, except:
Depletion, deterioration of equipment- A breakdown of equipment is defined as a direct loss to covered equipment that necessitates its repair or replacement as a result of any of the following: Failure of pressure or vacuum equipment Mechanical failure including rupture or bursting caused by centrifugal force Electrical failure, including arcing Depletion, deterioration of equipment is excluded.
All of the following are covered under the Broad Farm Property Coverage Form except:
Earthquake damage- Glass breakage that is part of a building, weight of ice, snow, or sleet, and falling objects are covered under the Broad Farm Property Coverage Form. Earth movement is excluded.
Which of these coverage forms provides indemnification automatically on a replacement cost basis?
Equipment Breakdown- Equipment Breakdown Coverage is replacement cost. (As a note, you may sometimes hear this coverage referred to as Boiler and Machinery, because boilers were the reason this policy was first developed.)
Coverage A of the Farm Property Coverage Form covers all of the following, except:
Feed racks-, Coverage A of the Farm Property Coverage Form covers residential buildings, attached structures, and materials on the location intended for use in the building. Coverage G, Other Farm Structures, covers farm buildings and structures other than dwellings, such as sheds, silos, portable buildings, fences, corrals, pens, chutes, feed racks, etc.
Which one of the following would not be covered by the Farm Property Coverage Form?
Flood, Power failure- Power failure and flood damage are excluded under the Farm Property Coverage Form. Electrocution of covered livestock, accidental death of livestock caused by loading/unloading, and attacks on covered livestock by wild animals are covered by the Broad and Special causes of loss forms.
The Farmowner's Policy is a combination of three different policies. Which two of the following are incorporated into this policy?
Homeowner's and Commercial Property- The three main policies used are Homeowner's, Commercial Property Building and Business Personal Property, and Commercial General Liability (which is covered in the casualty section of the course.)
What kind of insurance covers the San Francisco Golden Gate Bridge?
Inland marine- According to the nationwide definition, inland marine insurance covers four classes of property. One of those is the Means of Transportation forms which insure certain types of fixed property considered to be means of communication or transportation, such as bridges, tunnels, docks, piers, loading docks, and radio-TV towers.
What is a prominent feature of the businessowner's policy?
It is a packaged policy already containing many features a smaller business would probably need- The businessowners policy is an attractive policy for smaller companies that already contains many features that would probably be wanted. It has both property and casualty coverages and the agent does not have to put together many different coverage parts as in the CPP.
All of the following are excluded from coverage in the BOP except:
Leased property for which the insured has a contractual responsibility to insure- The following property is not covered: Aircraft, automobiles, motor trucks and other registered vehicles Money and securities Contraband, or property in the course of illegal transportation or trade Land, water, growing crops or lawns Outdoor fences, radio or television antennas and satellite dishes and their lead-in wires, masts or towers, signs not attached to buildings, trees, shrubs or plants Watercraft while afloat
What is the BOP coverage limitation for fast foods and smaller restaurants?
Limited cooking facilities- BOP property limitations: Restaurants - Fast foods and smaller, limited cooking facilities.
What is the BOP coverage limitation for retailers?
No more than $1,000,000/yr in sales or more than 15,000 sq. ft.- BOP property limitations: Retailers with sales more than $1,000,000/yr or more than 15,000 sq. ft.
What is the BOP property coverage limitation for office buildings?
No more than 6 stories or over 100,000 square feet- BOP property limitations: Office buildings of more than 6 stories or over 100,000 square feet.
Pier destroyed by fire
Piers, docks, and wharves are generally covered by Inland Marine and damage to autos are not covered.
The Livestock Coverage Form covers loss to livestock by:
Shooting of livestock accidentally The Livestock Coverage Form covers loss to livestock by accidental shooting. Freezing in snowstorms, running into ditches or fences and fright are not covered.(Yep. Who would have guessed? This wasn't covered in the lesson and should not be on the test, but if it is, you'll know the answer.)
What would be covered property in a BOP?
Signs attached to the building, Permanently installed machinery and equipment- The BOP provides broad coverage including signs attached to the building and equipment permanently installed, but has limited coverage for accounts receivable and other losses under the coverage extensions. Other excluded property includes land, money, autos, growing crops, and watercraft while afloat.
Which of the following are causes of loss forms available in the Businessowner's policy?
Standard and Special- The standard form is like the commercial basic causes of loss form. The special form is like the commercial special causes of loss form.
The Equipment Breakdown Protection Coverage Form of the Commercial Package Policy covers losses caused by:
Sudden and accidental breakdown of an insured object or part of the object, Damage to the insured's premises caused by the insured's boiler exploding- Equipment breakdown insurance, a coverage part of the Commercial Package Policy (CPP), covers loss due to the accidental breakdown of almost any type of equipment that operates under pressure or that controls, transmits, or uses mechanical or electrical power. Excluded from coverage are accidents caused from: Depletion, deterioration, corrosion or erosion. Wear and tear. Leakage at a valve or fitting. The functioning of any safety or protective device.
The insured has a BOP covering both direct and indirect losses. Which of the following would not be a covered loss?
Trucks in a parking lot damaged by fire. Piers, docks, and wharves are generally covered by Inland Marine and damage to autos are not covered.
Businessowners policies have a built-in automatic increase in the building limit. How much is the automatic increase for business personal property for seasonal variations?
Twenty five percent- Businessowners policies have a built-in automatic increase in the building limit. The limit for business personal property will automatically increase by 25% to provide for seasonal variations.
Which one of the following coverages would typically NOT be available in a Businessowners policy?
Workers' Compensation- The BOP is very comprehensive in coverage although there are low limits of liability for many losses. In general losses which would typically be covered under Commercial Auto, Workers' Compensation or Professional Liability are not covered.