Business Owner Policy - BOP & Workers' Compensation

Question 1

Businesses that are eligible for BOP

Answer 1

Less than 100 employees
Revenue of $6 million or less
Business occupying up to 35,000 square feet

Question 2

BOP Property Coverage

Answer 2

Coverage A - buildings
Coverage B - business personal property

Question 3

BOP Exclusions

Answer 3

Losses resulting from the enforcement of a building ordinance or law
Earth movement (does NOT include a fire or explosion resulting from earth movement)
Government action (government ordering demolition of a building)
Nuclear hazard
Damage caused by failure of power or other utility services occurring away from the insured’s premises (does NOT apply to loss or damage to computers and electronic media and records)
War and military action
Water, including flood, sewer backup, mudslides, or seepage of ground water
Mold, wet rot, dry rot, and bacteria, except as provided as an additional coverage
Explosion of any steam boilers, pipes, engines, or turbines
Dishonest or criminal acts of the insured or employees
Voluntarily parting w property if induced to do so by fraud or a trick
Pollution (unless the release, discharge, or dispersal is caused by a specified cause of loss)
Damage caused by insects, birds, rodents, or other animals

Question 4

BOP Optional Coverages

Answer 4

Employee dishonesty – must be discovered while the policy is in force or w/in one year after expiration (the discovery period)

Equipment breakdown – must be at the described premises. The policy definition of object lists equipment in two main categories: 1. Certain boiler and pressure vessels and 2. Certain types of air-conditioning units

Other optional coverages –
o Outdoor signs – provides coverage for direct physical loss or damage to all outdoor signs on the premises that are owned by or in the care, custody, or control of the insured
o Money and securities – applies to the loss of money and securities used in the insured’s business as a result of theft, disappearance, or destruction. Coverage applies while the money and securities are:
- at a bank or savings institution
- at the described premises
- in transit between any of these places

Question 5

BOP Utility Services - direct damage coverage Endorsement

Answer 5

covers loss or damage to property caused by an interruption in water, communication, or power supply service. For coverage to apply, the property must be scheduled for coverage on the endorsement and the service interruption must be caused by a covered cause of loss

Question 6

BOP Utility Services - time element coverage Endorsement

Answer 6

pays for loss of business income or extra expense if damage to certain utility services property located outside the covered building by a covered cause of loss results in an interruption of utility service to the described premises

Question 7

Workers’ Compensation Coverages

Answer 7

General Section
Part One - Workers’ Compensation Insurance
Part Two - Employer’s Liability
Part Three - Other States Insurance
Part Four - Your Duties if Injury Occurs
Part Five - Premium
Part Six - Conditions

Question 8

Workers’ Compensation Insurance - Part One

Answer 8

promises to pay all compensation and other benefits required of the insured by the WCL in the state or state’s where the insured’s business operates. No dollar limit applies, except those that are a part of the law

Question 9

General Section of Workers’ Compensation Coverages

Answer 9

contains definitions and conditions that apply to the policy as a whole

Question 10

Workers’ Compensation Employer’s Liability - Part Two

Answer 10

provides coverage to the insured for sums the insured becomes legally obligated to pay under common law because of a work-related injury or occupational disease. 3 separate limits apply:
 Bodily injury by accident – per accident – the most an insurer will pay for all claims
arising out of any one accident, regardless of the number of employees
 Bodily injury by disease – policy limit – the most an insurer will pay for employee bodily
injury by disease claims in one policy period, regardless of the number of employee
claims
 Bodily injury by disease – per employee – the most an insurer will pay for damages due
to bodily injury by disease to any one employee

Question 11

Workers’ Compensation Conditions

Answer 11

sets forth the conditions that apply to the policy, such as cancellation, procedures, subrogation, and the insurer’s right to inspect the insured’s workplace

Question 12

Workers’ Compensation Premium Computation

Answer 12

WCC is rated on base of employer’s payroll
For each job class, the manual provides a rate of $100 of annual payroll.
Premium discount based upon total amount of premium for all classes
A deposit premium is collected at the beginning of the policy period based on the estimated payroll
 At the end of the policy period, a payroll audit will be conducted to determine the final
premium for the policy period
Final premiums also adjusted by experience modification factor – based on comparing insured to other insureds in the same industry
 If claims are worse, modification will raise total premium
 If claims are better, modification will lower total premiums