Ch.13 - Businessowners Coverage Form

"your product" includes:

- Warranties and representations relating to the fitness of the product. - Warnings and instructions for safe use of the product. - Containers for the product.

Products-completed operations aggregate

All claims for bodily injury, and property damage that occur during the policy period and fall within the products completed operations hazard; aggregate limit is twice the Liability and Medical Expenses limit shown in the Declarations.

General aggregate

All losses, except those that fall within the products-completed operations hazard, including medical expenses personal injury and advertising injury offenses committed; aggregate limit is twice the Liability and Medical Expenses limit shown in the Declarations.

Separation of Insureds

Insurance applies as if each named insured were the only named insured, and separately to each insured against whom claim is made or suit is brought.

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? a. 25% b. 5% c. 15% d. 10%

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

Within how many days after an insured acquires new business property must the property be added to the BOP policy? a. 30 b. 60 c. 20 d. 45

a. 30 [Newly acquired or constructed buildings with a value up to $250,000 at each building is automatically covered up to 30 days.]

The Named Perils endorsement: a. Changes the open perils coverage to named perils coverage b. Extends bodily injury and property damage liability to the use of any non-owned auto c. Provides coverage for damage caused by the interruption of power to the insured premises d. Excludes hired and non-owned auto liability coverage

a. Changes the open perils coverage to named perils coverage [The Named Perils endorsement provides named perils coverage in lieu of the open perils.]

In which section of the BOP would coverage for outdoor property be found? a. Coverage extensions b. Optional coverages c. Endorsements d. Additional coverages

a. 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 of the following is not an optional coverage under the BOP? a. Electronic data b. Employee dishonesty c. Outdoor signs d. Money and securities

a. Electronic data [Electronic data is an additional coverage, not an optional coverage.]

Choose the false statement regarding the Businessowners Policy. a. Manufacturers are eligible for coverage b. Pollution clean up and removal are covered as an Additional Coverage c. Watercraft and associated equipment while afloat are not covered d. Named perils coverage is available by endorsement

a. Manufacturers are eligible for coverage [Manufacturers are ineligible for coverage under the BOP.]

All of the following are automatically covered under the Businessowners Policy, except: a. Mechanical breakdown b. Outdoor fixtures c. Personal property of others that is in insured's care d. Business personal property

a. Mechanical breakdown [Mechanical Breakdown is an optional coverage and not automatically included.]

The Businessowners Coverage Form to the Businessowners Policy provides coverage on which of the following basis? a. Open Perils b. Broad Perils c. Simplified Perils d. Modified Perils

a. Open Perils [The unendorsed Businessowners Coverage Form provides open perils coverage.]

Section I - Property of the BOP covers which of the following types of property? a. Outdoor furniture b. Land c. Pet animals d. Accounts, bills, and other evidences of debt

a. Outdoor furniture

Which of the following is false about the Businessowners Policy? a. The Supplementary Payments limit is a maximum of $2,500 for all expenses incurred by the insurer b. Medical expenses provide coverage without regard to negligence c. A real estate manager is considered an insured d. Medical expenses incurred within 1 year of the accident are covered

a. The Supplementary Payments limit is a maximum of $2,500 for all expenses incurred by the insurer [Supplementary Payments include all expenses incurred by the insurer without limit.]

The Additional Coverage for business income pays for the actual loss of business income for up to how many months after the date of the direct physical damage to the property? a. 6 b. 12 c. 18 d. 24

b. 12 [Ordinary payroll expenses, however, are only paid for 60 days following the loss unless the insured requests additional time and it is stated in the Declarations.]

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? a. 1 b. 3 c. 5 d. 7

b. 3 [The insurer may examine and audit the books and records as they relate to the policy during the policy period and up to 3 years afterward.]

The BOP covers property while it is being temporarily stored in another location for how many days? a. 15 b. 30 c. 60 d. 10

b. 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.]

Which of the following risks is not eligible for coverage under the Businessowners policy? a. An apartment building of any size b. A 10-story office building c. A wholesaler with 25% of the floor space open to the public d. A construction company with $300,000 total annual payroll

b. 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.]

Section III of the Businessowners Coverage Form includes: a. Applicable endorsements b. Common Policy Conditions c. Property related coverages d. Liability related coverages

b. Common Policy Conditions [Section III of the Businessowners Coverage Form includes the Common Policy Conditions.]

Section I of the Businessowners Policy does not cover which of the following? a. Permanently installed fixtures b. Computers permanently installed in a motor vehicle subject to registration c. Permanently installed machinery and equipment d. Personal property of customers held for repairs

b. Computers permanently installed in a motor vehicle subject to registration [Computers permanently installed (or to be installed) in any aircraft, watercraft, or other motor vehicle subject to registration, except when held as stock are not covered.]

Which statement is false regarding Section II of the Businessowners Coverage Form? a. Medical expenses incurred within 1 year of the accident are covered b. Medical expenses include bodily injury to an insured or a person hired to do work c. Bodily injury or property damage expected or intended by the insured is excluded d. The definition of insured product does not include vending machines used to distribute the product

b. Medical expenses include bodily injury to an insured or a person hired to do work [Medical Expenses payments do not apply to persons hired to work, or an insured.]

What is the method of property valuation used under the Businessowners Policy (BOP)? a. Actual Cash Value b. Replacement Cost c. Depreciation d. Stated Value

b. Replacement Cost [Replacement cost is the valuation method for the building and business personal property as long as the limit of insurance for lost or damaged property at the time of the loss is at least 80% of the full replacement cost of the property.]

Which statement is false regarding the Businessowners Policy? a. Supplementary Payments do not affect the policy limits b. Supplementary Payments include first aid expenses c. Hired and non-owned autos may be included by endorsement d. Auto dealers, banks and places of amusement are not eligible

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

The unendorsed Businessowners Policy will pay no more than what amount for the theft of jewelry? a. $7,500 b. $5,000 c. $2,500 d. $3,500

c. $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 in any one loss.]

Under Section II - Liability & Medical Expenses, who is covered for medical expenses after being injured while at an insured premises? a. A person taking part in athletics b. A tenant of the insured c. A client of the insured d. A cleaning crew hired by the insured

c. A client of the insured [A person taking part in athletics, renters and a person hired to do work on behalf of an insured are excluded.]

Each of the following individuals is an insured under the BOP, except: a. The insured's legal representative if the insured dies b. Any person acting as the named insured's real estate manager c. A sole proprietor's minor child d. The manager of a limited liability company

c. A sole proprietor's minor child [The named insured, executive officers and directors, and stockholders of any covered organization other than a partnership, joint venture, or limited liability company are covered.]

All of the following are true of a Businessowners Coverage Form, except: a. The most the insurer will pay for loss or damage arising out of any occurrence is the limit of insurance shown in the Declarations b. Section III of the coverage form contains the Common Policy Conditions c. Employee dishonesty is automatically included in each policy d. Land, including land on which the property is located, is not covered

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

Which of the following is not an exclusion under Section II of the Businessowners Coverage Form? a. Professional Liability b. Employers Liability c. Medical payments to volunteer workers d. Watercraft Liability

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

Which covered causes of loss form is used for the BOP? a. Actual Cash Value b. Replacement Cost c. Open perils d. Stated Value

c. Open perils [Unless the loss is excluded, the loss to a covered building and business property is the risk of direct physical loss, or open perils.]

Under a Businessowners Policy medical expenses coverage: a. Is written in place of bodily injury b. Pays sums for which the insured is legally liable c. Provides coverage without regard to negligence d. Prohibits further action for recovery after acceptance of payment

c. Provides coverage without regard to negligence [Medical Expenses payments are made without regard to fault.]

Damage to a building insured under the Businessowners Policy is valued on which basis? a. Functional Replacement Cost b. Agreed Value c. Replacement Cost d. Actual Cash Value

c. Replacement Cost [The Businessowners Policy covers both building and contents on a Replacement Cost basis.]

All of the following are true about the Limits of Liability under Section II of the BOP, except: a. The Medical Expense limit is a per person limit b. The Liability and Medical Expense limit applies per person or organization for personal injury claims c. The Products and Completed Operations aggregate limit is equal to the Liability and Medical Expense limit d. The Damage to Premises Rented to You limit applies only to premises rented to the insured

c. The Products and Completed Operations aggregate limit is equal to the Liability and Medical Expense limit [The Products and Completed Operations aggregate limit is twice the Liability and Medical Expense limit.]

The resumption of operations condition requires that the insured do which of the following? a. Return to the building within 60 days b. Submit a proof of loss within 30 days c. Use damaged property to resume operations d. Replace damaged property on a reimbursement basis

c. Use damaged property to resume operations [If the insured declines to use property to resume operations after a covered business income loss, the policy will reduce the amount of the business income loss payment for the resumption of operations that should have been made.]

The insured may extend up to how much of the insurance for business personal property to property located off-premises? a. $1,000 b. $2,000 c. $7,500 d. $10,000

d. $10,000 [This Coverage Extension applies to the business personal property while in transit or at a property not owned, leased, or operated by the insured.]

The Earthquake endorsement to the BOP provides that coverage continues for how long after a policy expires? a. 36 hours b. 48 hours c. 24 hours d. 168 hours

d. 168 hours [Earthquake coverage continues for up to 168 hours after the policy expiration if an earthquake or volcanic eruption began before the policy expired.]

Payroll is covered for how long under Businessowners Business Income coverage? a. Payroll is not covered b. 12 months c. 6 months d. 60 days

d. 60 days [Payroll losses are only paid for 60 days, while the loss sustained will be covered for 12 months.]

The BOP policy provides the same liability coverage as which of the following policies? a. Business & Personal Property b. Commercial Auto c. Commercial Inland Marine d. Commercial General Liability

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

Which coverage is not included in a standard Businessowners Policy? a. Business Income and Extra Expense b. Seasonal increase of 25% c. Automatic 8% increase for Buildings d. Direct Damage from Utility Services

d. Direct Damage from Utility Services [The Utility Services Direct Damage coverage must be added by endorsement.]

Which of the following is not covered under the BOP? a. Business income b. Interruption of computer operations caused by a virus c. Electronic data valued at $10,000 d. Errors or Omissions

d. Errors or Omissions [Errors or omissions are excluded from coverage under the BOP.]

Which of the following is an eligible risk under the BOP? a. Manufacturer b. Small amusement park c. Auto repair shop d. Fast food restaurant

d. Fast food restaurant [Fast-food and limited cooking restaurants are eligible for coverage.]

The BOP may be cancelled by which of the following insureds? a. Named insured b. Owner c. Any partner d. First named insured

d. First named insured [The First Named Insured may cancel the policy by mailing or delivering an advance notice of cancellation to the insurer. ]

Each of the following is a characteristic of an eligible risk for the BOP, except: a. Apartment building b. Building occupies 20,000 square feet of area c. Small business d. Manufacturing occupancy

d. Manufacturing occupancy [Other ineligible risks include automobile repair or service stations, dealers, garages, places of amusement, and restaurants and bars that do not meet the restaurant eligibility rules.]

Which statement is false regarding the Businessowners Policy? a. Optional coverage for money and securities is available b. Optional coverage for employee dishonesty coverage is available c. A motel of 3 stories in height is eligible d. Most insurance losses are settled on an actual cash value basis

d. Most insurance losses are settled on an actual cash value basis [Losses are generally settled on a replacement cost basis, unless ACV coverage is selected in the declarations.]

In which section of the BOP would coverage for equipment breakdown be found? a. Endorsements b. Coverage extensions c. Additional coverages d. Optional coverages

d. Optional coverages [Optional coverages must be shown as applicable in the Declarations and include outdoor signs, money and securities, employee dishonesty, and equipment breakdown.]

All of the following are Optional Coverages under the Businessowners Policy, except: a. Employee dishonesty b. Outdoor signs c. Money and securities d. Personal property of others that is in the insured's care, custody and control

d. 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.]

All of the following are true of Section II of the Businessowners Coverage Form, except: a. A personal injury loss must be committed in the coverage territory during the policy period b. Employees are considered insureds with respect to their activities as employees c. Bodily injury coverage does not apply to rendering or failure to render professional services d. Property damage liability coverage applies to property that the insured owns, rents and occupies

d. Property damage liability coverage applies to property that the insured owns, rents and occupies [Property damage liability does not apply to any property the insured owns, rents, or occupies. Property damage liability is third party coverage, not first party.]

Each of the following standard limitations under the BOP's Section I - Property limits of insurance is correct, except: a. $1,000 per outdoor sign attached to the building per occurrence b. The Business Personal Property limit will increase by 25% yearly, subject to the average monthly values of the past year c. A loss or damage occurrence is limited to the applicable limit of insurance shown in the Declarations d. The Buildings limit of insurance will automatically increase by 10% each year

d. The Buildings limit of insurance will automatically increase by 10% each year [The limit of insurance for buildings will automatically increase by 8%.]