Chapter 11: Businessowners Policy Flashcards
Purpose of Businessowners Policy (BOP)
provides property & labiality coverage for small/medium sized businesses
Coverages automatically included in BOP
-Business Income & Extra Expense Coverage, up to 12 months; income from dependent properties
-Inflation guard
-Peak season coverage (up to 25% of business personal property)
-Glass expense and fire extinguisher system recharge expense
BOP- other information
*loss replacement basis
*coinsurance?
- Special Form
- Insurance to value requirement; requires limit of insurance equal to 80% or more of the full RC of the property immediately before the loss
BOP- Optional coverages
outdoor signs, money/securities, employee dishonesty, equipment breakdown
9 Risks eligible for coverage
*meant for low risk businesses
-apartment building
- office buildings
- Mercantile, processing, service risks (bakeries, barber shops)
- Contractors; annual payroll doesn’t exceed $300,000 and no work done over 3 stories
- Convenience stores; w/ minimum of 3,000 sq. ft
- Motels; under 3 stories, no bar/lounge/seasonal
- Restaurants; limited to 7,500 sq. ft, max seating 150, limited cooking 75, beer/wine 25% of sales, casual/fine dining alcohol sales 50%
- Storage; no more than 2 stories, no chemicals, industrial material, cold storage
-Wholesale Risks; no more than 25% retail sales and 25% are open to public
10 ineligible risks
*takes it out of low risk
- Manufacturers
- Banks
- Wholesalers not specified
- Amusement parks
- Processing and servicing
- Auto dealers, repair/service stations, parking lots/garages
- Household personal property
- Restaurants/bars/pubs (too much alcohol)
- Businesses located in building w/ ineligible processing or manufacturing operations
- Contractors (heavy construction, demolition, larger general contractors)
6 property included under the building
- Completed additions
- Fixtures
- Permanently installed machinery/equipment
- Personal property in apartments
- Personal property used to service/maintain the building
- additions in progress, w/n 100 ft of premise
BPP covered
insured’s personal property located in/on the building described on the dec pages or in the open (vehicle) w/n 100 ft. of the described premises
10 property not covered
- aircraft/auto
- money or securities
- contraband
- land, water, growing crops/lawns
- outdoor fences, radios, antennas, signs, trees/shrubs
- watercraft while afloat
- accounts, bills, food stamps, other evidences of debt
- computers permanently installed or designed in aircraft, watercraft, truck or vehicle
- electronic data
- animals
Causes of Loss
*similar to CP Causes of Loss- special form
insured for risks of direct physical damage unless otherwise excluded/limited
Concurrent Causation exclusions
- weather conditions; excluded events
- acts or decisions
- negligent work
limit of insurance for outdoor signs attached to buildings
$1,000
How much coverage is provided under BPP limit- seasonal increase
25%; only applies if the limit of insurance is 100% of the average monthly values during the 12 months prior to the loss
How does vacancy affect the property coverage
if the property is vacant for more that 60 consecutive days, policy will pay nothing for losses arising from vandalism, sprinkler leakage (unless protected from freezing), building glass breakage, water damage, theft/attempted
Loss Valuation Clause under Section 1
will pay a specified amount for losses
Optional Coverage: Outdoor Signs
coverage to all outdoor signs at insured premises; limit of liability on dec pages, open perils basis with few exclusions (wear/tear), subject to the deductible
Optional Coverage: Money and securities
theft, disappearance or destruction of the insured’s money/securities while on premise, transit, bank, or living quarters of insured/employee; limit is purchased separately for inside/outside premises
Optional Coverage: employee dishonesty
loss of business, personal property, money/securities caused by a dishonest employee and discovered w/n 1 year from policy expiration
*limits $10,00 on premises and $5,000 off premises
Optional Coverage: equipment breakdown
sudden breakdown of pressure, mechanical, or electrical machinery/equipment that necessitates repair/replacement; must be owned or in the care of the insured at the described location
Period of Restoration
begins 72hrs after time of direct physical loss/damage for business income loss OR immediately after loss/damage for extra expense coverage; caused by covered loss on premises; ends on the earlier of the date when the property should be repaired, replaced, rebuilt with reasonable speed/quality OR date when business is resumed at new location
Coverages under Section 2- Liability
COV A&B are combined under Business Liability
COV C is called Medical Expenses
How does the BOP liability coverage format differ from CGL
BOP is only written on an occurrence basis
Supplementary Payments
same as CGL
two differences in exclusions under the BOP compared to CGL
The Aircraft, Auto or Watercraft- nonowned less than 51ft in length
Professional Services Exclusion- bodily injury, property damage, personal injury, advertising injury, due to rendering/failing to any professional service
Who is an insured
chart pg. 18
Included in the policy premium are basic limits: what are they
*liability, medical payments, damage to premises rented
Liability $300,000 per occ. and $600,000 aggregate
Medical Payments $5,000
Damage to Premises Rented to you of $50,000
5 limits within Businessowners Liability
- Liability & Medical Expense Limit- any one occurrence
- Medical Expenses Limit- per person limit, reduces General Aggregate limit
- Damage to Premises Rented to You
- Products/Completed Operations- during policy period, no matter how many claims
- General Aggregate- injury/damage/medical occurrences; twice the liability/medical limit
Products and Completed Operations hazard
bodily injury/property damage occurring away from premises & arising out of your product. Liability coverage for consumption of insured’s product on insured’s premises (fast food)
Product and Completed Operations vs. CGL
*what makes it different
Includes liability coverage for consumption of insured’s product on insured’s premises (fast food)
Common Policy Conditions: Changes and who can make them
same as CPP; only first named insured to request changes to policy with insurance company’s consent
Common Policy Conditions: How does Other Insurance differ from the CGL
BOP is excess over any other insurnace
Common Policy Conditions: Recovery Against Others to Us (Subrogation)
*property vs. liability loss
Property- insured may waive right of recovery prior/after loss
Liability- insured may waive rights prior, not after loss
Common Policy Conditions: Rights and Duties Under this Policy (Assignment)
insured’s rights/duties may not be transferred w/o insurer’s written consent; except in case of death of named insured. If insured dies, company will insure the legal representative of the insured for 180 days or until end of policy, whichever is longer (unless property is sold)
Examination of Books: Common Policy Condition
permits insurance company to examine the insured’s record/books up to 3 years from the policy expiration date
Endorsement: Hired and Non-Owned Auto Liability
provides liability insurance for Business Auto exposures; entity that does not own any auto and does not have a Commercial Auto Policy
Hired Auto
any auto hired, rented, leased, or borrowed by the business
Non-Owned Auto
auto not owned, leased, borrowed by insured that is used in connection with the insured’s business
Endorsement: Protective Safeguards
*open applies to peril of fire
identify protective safeguards for premium discount; subject to suspension for not working/shut off during claim
Endorsement: Utility Services- Direct Damage
pays for loss to the insured’s property resulting from an interruption of utility services (water, communication, power)
*must arise from direct damage to utility company from a covered cause of loss
Endorsement: Utility Services- Time Element
provides coverage for a loss of income or extra expenses arising from a loss of the utility service
*must arise from a covered cause of loss
