Chapter 15

Under the Outdoor Property Coverage Extension available on the Businessowners Coverage Form, what limit of insurance is available for loss of any one tree, shrub, or plant?

$1,000

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, the insurer may examine and audit books and records at any time during the policy period and up to how many years following policy termination?

3

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

30 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 Protective Safeguards Endorsement on a Businessowners policy requires the insured to notify the insurer if an automatic sprinkler system is off for how long?

48 hours Because a premium reduction is granted for the protective systems listed in the Protective Safeguards Endorsement, the insurer insists upon being notified if the systems are not functional. If the sprinkler system can be repaired within 48 hours, notice is not necessary.

The Protective Safeguards Endorsement on a Businessowners policy requires the insured to notify the insurer if an automatic sprinkler system is off for how long?

48 hours Because a premium reduction is granted for the protective systems listed in the Protective Safeguards Endorsement, the insurer insists upon being notified if the systems are not functional. If the sprinkler system can be repaired within 48 hours, notice is not necessary.

Under the business income coverage provided by the Businessowners Coverage Form, payroll is covered for how long?

60 days

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

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. Apartment buildings, including residential condominium associations, are also eligible regardless of size.

Under Section I - Property Coverages of a Businessowners policy, which of the following statements about conditions is correct?

A breach of policy conditions will only affect coverage at locations where the breach exists Under the Controlled Property condition, a breach of policy conditions only affects coverage at locations where the breach exists. A breach of conditions may be cause for the insurer to deny a claim.

After a direct physical loss, the Accounts Receivable Coverage Extension on a Businessowners policy provides coverage for all of the following, except:

Amounts the insured owes to customers

After a direct physical loss, the Accounts Receivable Coverage Extension on a Businessowners policy provides coverage for all of the following, except:

Amounts the insured owes to customers The Accounts Receivable Coverage Extension covers the amounts due from customers that the insured cannot collect due to a direct physical loss of accounts receivable.

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

Auto dealerships

The Hired Auto and Non-owned Auto Liability Endorsement on a Businessowners policy will cover:

Bodily injuries to others arising out of an employee's business use of a hired auto The endorsement provides liability coverage for bodily injury or property damage arising out of the maintenance or use of a hired auto (one that the insured leases, hires, rents, or borrows) or the use of a non-owned auto (such as an employee's auto used for business purposes). Liability arising out of owned vehicles is not provided by this endorsement.

Which of the following policies does NOT have a true coinsurance provision?

Businessowners policy The Businessowners policy does not have a true coinsurance provision. Instead, it has an insurance to value provision that incentivizes maintaining insurance equal to 80% of the building's replacement value. Other commercial property coverages frequently have a true coinsurance provision, including the Building and Personal Property Coverage Form, Business Income coverage forms, and Farm Property coverage forms (with a coinsurance provision applying to Coverage F, for example).

As defined by the Businessowners Coverage Form, personal injury includes all of the following offenses, except: A Slander or libel B False arrest or detention C Unfair discrimination D Invasion of privacy

C

Section I of a Businessowners policy does not cover which of the following?

Computers permanently installed in a motor vehicle subject to registration Motor vehicles and computers permanently installed in them are not covered by the Businessowners policy, as a Commercial Auto policy would provide better coverage. The same is true for aircraft, watercraft, and any computer installed in them.

In order for the BOP's Increased Cost of Construction Additional Coverage to apply, the increased costs must be incurred to comply with an ordinance or law related to:

Construction or repair of buildings The Increased Cost of Construction Additional Coverage applies to increased costs incurred to comply with an ordinance or law relating to the construction or repair of buildings, or to zoning or land use requirements. Other responses to ordinances or laws are excluded. Pollution clean-up and removal is subject to its own Additional Coverage.

A funeral home protected by an unendorsed Businessowners policy is damaged by a fire. Actual loss of business income is:

Covered, beginning 72 hours after the fire loss

Which of the following is covered by the Hired Auto and Non-owned Auto Liability Endorsement on a Businessowners policy?

Damage to the property of others arising out of an employees use of a non-owned auto The endorsement provides liability coverage for bodily injury or property damage arising out of the maintenance or use of a hired auto (one that the insured leases, hires, rents, or borrows) or the use of a non-owned auto (such as an employee's auto used for business purposes). Liability arising out of owned vehicles is not provided by this endorsement. Damage to property being transported by the insured is also excluded.

The deductible applicable to the BOP's property coverages would apply to which of the following Additional Coverages?

Debris Removal The Debris Removal Additional Coverage would be subject to the policy deductible. Business Income, Extra Expense, Civil Authority, Fire Department Service Charge, and Fire Extinguisher Systems Recharge Expense Additional Coverages are not subject to a deductible.

An insured protects their business on a Businessowners policy that includes the Equipment Breakdown Protection Optional Coverage, and the business also has a separate Equipment Breakdown Protection policy. In the event of a mechanical breakdown to covered equipment, equipment breakdown coverage provided by the BOP is:

Excess coverage that applies after the Equipment Breakdown Protection policy exhausts its limits

Businessowners policies define pollutants to include all of the following, except:

Falling objects Pollutants include smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste, as well as other solid, liquid, gaseous, or thermal irritants or contaminants. Falling objects are not included in this definition.

The BOP will exclude all of the following losses, except:

Fire damage resulting from an artificially generated electricity loss Rust, continuous or repeated seepage of water, and certain weather damages to personal property in the open are all excluded by the BOP. Losses resulting from artificially generated electricity are also excluded, except that resulting fire damage is covered.

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

Funeral home

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.

In order for coverage for the increased cost of construction to apply, a Businessowners policy must:

Insure the building on a replacement cost basis

Which statement about the BOP Utilities Services - Time Element Endorsement available for Businessowners policies is correct?

It pays for loss of business income or extra expenses incurred at the described premises caused by the interruption of service at the described premises

Fragile articles insured under a Businessowners policy are insured against specified causes of loss. All of the following perils are included in the policy's definition of specified causes of loss, except:

Landslide Landslide is an excluded peril under the Earth Movement exclusion.

Which of the following would not be covered under a Businessowners policy unless specifically activated on the Declarations page?

Loss caused by employee theft

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.

Which of the following is an eligible risk under the Businessowners Coverage Form?

Manufacturer Processing and service risks are eligible for the BOP, including dental labs, barber and beauty shops, dry cleaners, and funeral homes. Auto operations, financial institutions, and manufacturers are ineligible.

A fast-food restaurant is covered by a Businessowners policy. Under the policy's liability coverages, the insured must:

Notify the insurer as soon as practicable of an occurrence or offense that may result in a claim

The BOP automatically provides a number of Additional Coverages, including coverage for all of the following, except:

Off-premises utility failure

The Businessowners Coverage Form typically provides coverage on what basis?

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

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 expense 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.

Under Section II of the Businessowners Coverage Form, all of the following are excluded, except:

Personal and advertising injury liability Personal and advertising injury liability is provided by business liability coverage under Section II. Liability associated with the ownership, maintenance, or use of an aircraft, auto, or watercraft (including damages during loading or unloading) is excluded from coverage.

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.

Damage to a building insured under a Businessowners policy is usually valued on which basis?

Replacement cost

Losses to most business personal property insured by a Businessowners policy are settled on what basis?

Replacement cost As a baseline, the BOP offers replacement cost coverage for buildings and business personal property. However, specific items of property are only valued on an actual cash value basis, such as the property of others, secondhand merchandise held in storage, and works of art.

The Personal Property Off-Premises Coverage Extension on a Businessowners policy covers which of the following items of personal property while in transit?

Stock The Personal Property Off-Premises Coverage Extension insures covered property while it is in transit off the described premises for up to $10,000. Money, securities, valuable papers and records, and accounts receivable are not covered by this Coverage Extension.

Under a Businessowners policy, all of the following statements about limits applying to liability coverage are correct, except:

The Damage to Premises Rented to You limit is written on a per person basis

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.

Under the Businessowners policy, if there is other insurance covering the same loss, how will the policy respond?

The insurer will pay only for the amount of covered loss or damage in excess of the amount due from that other insurance

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

Theft of contracts representing money

The Businessowners Coverage Form could provide property coverage for all of the following, except:

Vehicles subject to motor vehicle registration Vehicles subject to motor vehicle registration cannot be insured on any policy that is not an auto policy, so the BOP would not be able to provide auto coverage. Tenant's improvements and betterments are covered as business personal property, in the event the tenant-insured does not own the building, but has made alterations to the building that need coverage.

The BOP defines Your Product to include all of the following, except:

Vending machines The definition of Your Product excludes vending machines. Goods or products manufactured, sold, handled, distributed, or disposed of by the insured are considered the insured's products, as are warranties about quality and instructions.

Which of the following could receive payments for medical expenses, as covered under Section II of the Businessowners Coverage Form?

Volunteer workers

Under a Businessowners policy, all of the following types of property are covered by Section I, except:

Watercraft used for business purposes. Like aircraft and motor vehicles, watercraft and associated equipment are considered property not covered by Section I. The property of others in the insured's care, custody, or control is covered under business personal property coverage.

The period of restoration that applies to business income coverage provided by the Businessowners Coverage Form will end:

When the property should be repaired or business is resumed at a new permanent location

Which of the following coverages is not available under a Businessowners policy?

Workers' Compensation Workers' Compensation, which provides disability benefits for workplace injuries, is a separate type of insurance that is not available on any other liability policies. Property coverages are provided by Section I, which includes business income and extra expense coverages (also known as time element or business interruption coverages). Liability coverages are provided by Section II.

When the named insured's personal effects are insured by the Personal Effects Coverage Extension of a Businessowners policy, coverage is provided against all of the following perils, except:

theft