Unit 19 (Business Owners Policy BOP)
The standard deductible for the businessowners policy is
$500
Teds TV shop employees are installing a TV at mandys home. While doing so, they drop the TV causing damages to the TV in the amount of $250. They also damage the floor and wall in the amount of $700. What will Teds BOP policy pay assuming his limits are adequate?
$700 (tv has no coverage since it is in the care custody and control of teds employees)
Brendas bakery which is covered by a BOP sustains a fire loss of $50,000 to the building and $25,000 in content damages is incurred. in addition a customer and an employee are injured in the fire. medical payments for their injuries amount to $2,000 for customer and $3,000 for worker. Brendas business income is $5k per month but she is unable to conduct any business for 60 days as a result of the fire. Assuming Brenda has adequate limits to cover this loss how much will her policy pay?
$87,000 ($50,000 building + $25,000 contents + $10,000 business income +$2,000 injured customer injuries = $87,000)
What are some exclusions from bodily injury and property damage liability losses?
-injury or property damage that is intentional or expected -injury arising out of the ownership, maintenance, and use of aircraft autos and watercraft -damage to property that the insured owns rents or occupies
All of the following statements about the hired auto and nonowned liability endorsement are true
-the endorsement is available only when the insureds business doesn't have commercial auto insurance -it covers the insureds liability when BI arises out of the maintenance or use of a hired auto borrowed by the insured or the insureds employees in the course of the insureds business -it covers the insureds liability when property damage arises out of the maintenance or use of a hired auto borrowed by the insured or the insureds employees in the course of the insureds business
The BOP will pay reasonable expenses for
1 year from date of accident
Medical expenses will pay reasonable expenses for first aid , medical services and funeral services within
1 year of the date of the accident
One of the common underwriting requirements for a BOP is that a small business must have less than
100 employees
personal property is covered when it is within how many feet of the premises?
100 feet
If an insured has the preservation of property additional coverage included in their BOP, how many days does coverage apply while the property is being stored in another location?
30 days from the day the property was first moved
Which of the following losses would be EXCLUDED under the property coverage of the BOP? -termites damaged an insureds building -an employee was tricked into giving merchandise to a person who said they were there to pick up the item for the actual customer -an error in the design specifications for an insureds building resulted in the buildings collapse 6 months after construction was completed
All of these are excluded
Paul purchases a small bicycle shop and wants to buy insurance to cover his business exposures. Which of the following contracts would provide Paul with the best protection?
Business owners policy
What is an optional coverage under the BOP?
Employee dishonesty
Susan has an additional coverage that helps her cover the costs of moving to a new location and renting equipment and space while her building is repaired from a fire. Which of the following additional coverages foes Susan most likely have?
Extra expense
a business that delivers materials or services to an insured, accepts the insureds products or services, manufactures products for delivery to the insureds customers, or attracts customers to the insureds business is known as
a dependent property
All of the following are covered as Business personal property EXCEPT -wall to wall carpeting -accounts receivable -leased computers -exterior building glass
accounts receivable
The property coverage in the unendorsed BOP is written on
an open peril basis
property coverage in the BOP is covered on
an open peril basis
Mechanical breakdown coverage is
an optional BOP coverage
The unendorsed businessowners liability coverage excludes
auto liability
Which of the following coverages is NOT available on the BOP -equipment breakdown -business personal property -business income -business auto
business auto
Ted's TV shop has a fire, and the shop must be closed for repairs for several months. Ted cannot generate an income while his shop is not open for business. Which additional coverage will pay for the revenue loss while the shop is closed?
business income
the standard deductible for the business owners policy applies to
civil commotion
Example of classes and business personal property that is NOT covered in a BOP
land
Which covers an insureds legal liability from loss that arises from BI property damage and personal advertising injury
liability coverage
Which of the following statements about the BOP is NOT correct? -aircraft is not covered under BOP -Motor vehicles are not covered under a BOP -land is not covered under BOP -tenants improvements are not covered under BOP
tenants improvements are not covered under BOP (they are covered)
Bridgepoint Accounting services is a limited liability company. Who are the insureds?
the named insured, managers, and the named insureds employees
All of the following coverages can be found in the BOP EXCEPT -business income -liability -workers compensation -extra expense
workers compensation
Debris removal is an additional coverage that Adam selected to have added to his BOP. Adam had a fire that resulted in $100,000 property damage loss and an additional $10,000 cost for debris removal. How much will the debris removal additional coverage pay Adam?
$10,000 (25% of the amount paid for direct physical loss Ex $100k x .25 = $25k)
Patti opened up a new location for her business. Under the newly acquired or constructed property coverage extension, how much personal property would be covered at her new location?
$100,000 (coverage for newly acquired business personal property is $100,000 at each location)
Abbys beauty parlor suffers a loss caused by lightning. Her parlor sustains $10,000 of building damage and $5,000 personal property loss. Her fire department also charged her $1,000. To meet current building codes , her cost to repair her building was an additional $2,000. What will her BOP pay, assuming that her limits are adequate?
$18,000
What is the maximum amount that the businessowner policy will pay for property damage to an outdoor sign NOT attached to a building?
$2,500
Adams appliances sustains a fire loss and has the following losses: damage to the building is $15,000, damage to contents is $7,000, debris removal is $5,000 and damage to valuable papers and records is $15,000. What will his business owners policy pay, assuming his limits are adequate?
$37,000 (all losses covered in full except valuable papers and record, which has a limitation of $10k. For valuable papers not at prescribed premises the limit is $5k)
the standard deductible for property losses on BOP is
$500
Bill is hurt while he is a customer at sues flower shop which is covered by a BOP. He is awarded $50,000 for BI , he also has incurred $2,000 for medical expenses for the 1st year after the injury and another $1,000 reported in the 2nd year. How much will sues business owner policy pay assuming she has enough insurance?
$52,000 (all would be covered but the 2nd year of medical expenses)
John is thinking about buying a new bicycle. While test driving a 10 speed at pauls bike shop, john was thrown from the bike after the front wheel came off. He is awarded $55k for BI as the court found pauls shop negligent. Paul has $600 in lost earnings for the 2 days he had to be in court. What would his policy pay assuming he has insurance?
$55,500 ($250 a day for lost earnings)
In addition to maximum floor space of 35,000 the business owners eligibility rules limit eligible risks to a maximum of how much in annual sales
$6 million in annual sales
How long does coverage apply for the civil authority additional coverage?
72 hours after the action and for 4 consecutive weeks
Business owners liability coverage will cover losses due to which of the following occurrences?
A suit brought by a competitor for libel (under BOP insurer pays all sums that the insured becomes legally obligated to pay as damages because of BI, PD or personal injury caused by an occurrence which insurance applies)
Which of the following losses would NOT be excluded under the business owners policy? -loss caused when underground water seeps through the foundation of an insureds building -additional expense incurred when the insureds damage building is required by a city ordinance to be completely torn down and rebuilt rather than repaired -loss caused by a power failure that occurs on the insureds premises -loss caused when an insureds equipment breaks down and prevents the insured from earning income
Loss caused by a power failure that occurs on the insureds premises
Recently the local utility company's main power supply depot was damaged by high winds. Mike who owns a TV store wants to make sure he has coverage for damage to all the TV components demonstrated in his store if the power goes out. What does mike need to purchase?
Utility services - direct damage coverage
All of the following are common exclusions in the business owners policy EXCEPT -earth movement -water, including flood and sewer back up -damage caused by insects, rodents, or birds -collapse
collapse
The conditions that apply to an entire businessowners policy are called
common policy conditions
All of the following items are covered under Coverage A of a BOP EXCEPT -portable fire extinguishers -computers and photocopiers -fixtures -repairs to the building
computers and photocopiers
Which of the following statements about a supplementary payment is NOT correct? -do not reduce the policy limit -cover up to $250 for the cost of bail bonds -do not cover expenses that the insurance company incurs -cover costs the insured is required to pay because of a lawsuit
do not cover expenses that the insurance company incurs
All of the following risk exposures are covered by the liability section of the business owners policy EXCEPT -employers liability -premises liability -product liability -personal and advertising injury
employers liability
Which of the following is an optional coverage in the BOP that may require that the insured to pay an additional premium?
equipment breakdown
What is not an additional coverage in a BOP?
flood coverage (available separately through the National Flood Program)
Doreens printing shop delivers finished items to local customers. doreen usually makes the delivers herself, but when she is too busy, one of her employees will use his won car to drop off products with her customers. What type of an endorsement would cover doreens liability?
hired auto and nonowned auto liability endorsement
Which of the following is NOT excluded under business owners liability coverage? -pollution losses caused by the insured -liability assumed under an insured contract -the cost of recalling the insureds product because of a suspected safety hazard -damage to the insureds own work
liability assumed under an insured contract
What is a loss that is covered by the BOP?
loss caused by a power failure that occurs on the insureds premise
All of the following are considered additional coverages in the BOP EXCEPT -debris removal -mechanical breakdown -increased cost of construction -collapse
mechanical breakdown (requires an additional premium the others do not)
Pauls bicycle shop is covered by a BOP Pete a customer is injured when he slips on the wet floor. Where would Paul find coverage in his policy?
medical expenses
Which of the following is an ineligible risk in the business owners policy? -MORE than 100 employees -LESS than 100 employees -revenues of $6 million or less -business occupying up to 35,000 square feet
more than 100 employees
Which of the following businesses would be eligible for a BOP? -neighborhood bar -public parking garage -motel with 2 floors -manufacturing facility
motel with 2 floors (motels not exceeding 3 stories and meet other eligilibty requirements are covered)
Mary is a customer at Bobs bait shop which is covered by a business owners policy. Bobs auto strikes her when she is leaving the store parking lot. Mary has medical payments expenses of $450. Bob will find coverage
never because the businessowners policy does not cover this type of loss
Which of the following types of business would be better covered by a CGL than a BOP? -greeting card store -accountants office -oil refinery -12 unit apartment building
oil refinery
Which of the following would NOT be covered under the building coverage of the business owners policy? -additions under construction -completed additions -materials or equipment within 100 feet of the premises -outdoor fences
outdoor fences
What is an exclusion regarding coverage A - building coverage?
outdoor fences, signs, trees, shrubs, and plants (specifically excluded unless covered under optional coverage or coverage extension)
All of the following are optional property coverages under the BOP EXCEPT -outdoor signs -personal property off premises -mechanical breakdown -money and securities
personal property off premises
Which one of the following coverages is NOT included in the businessowners policy? -bodily injury liability -property damage liability -medical expense -professional liability
professional liability
the BOP is designed for
small businesses
Which of the following statements regarding the employee dishonesty optional coverage is NOT correct? -the insurance company will not pay for a covered loss that is discovered after 6 months from the expiration of the policy -only a loss that occurs during the policy period is covered -coverage of an employee is canceled immediately upon discovery the employee committed a dishonesty act -the insurance company will not pay for a covered loss that is discovered after 1 year from the expiration of the policy
the insurance company will not pay for a covered loss that is discovered after 6 months from the expiration of the policy
Which of the following is NOT one of the five different classes of business personal property covered? -a tenants improvements and betterments -the property of others in the insureds care -the land that the property is on -the exterior building glass
the land that the property is on
on the businessowners policy declarations page, the named insured is listed as a limited liability company. In this example, all of the following individuals would be insured EXCEPT -The named insured -the named insureds partner or spouse -the members of the organization -the managers of the organization
the named insureds partner or spouse
There are two sets of conditions that apply to every policy for property coverage. These conditions are known as the property general conditions and
the property loss conditions
An insured is required to have a sprinkler system and a burglar alarm installed on the premises in order to meet certain conditions of a policy endorsement. Which endorsement does the insured likely have?
the protective safeguard endorsement
Which of the following endorsements covers loss or damage to a property caused by an interruption in water, communication, or power supply service?
the utility services - direct damage coverage endorsement
Brian, the owner of a small boutique, is covered by an unendorsed business owners policy. He detains Susan, a customer for shoplifting. The police come and Susan is not charged with any crime. Susan is very upset with Brian and sues his store for damages. Where might Brian find coverage for this loss?
this coverage is included in the business owners policy under personal injury
Other additional coverages in the BOP include all of the following EXCEPT -trees and detached signs -money orders and counterfeit money -fire department service charge -pollutant cleanup
trees and detatched signs (this is a coverage extension not an additional coverage)
