The Businessowners Policy (BOP)—Liability Provisions

Question 1

Liability coverage is provided under Section __ of the businessowners coverage form. Many of the BOP’s liability provisions are identical to counterparts in the ___ ___ ___ form.

Answer 1

A) II (2)

B) commercial general liability (CGL)

Question 2

The businessowners liability coverage form provides three categories of coverage:

Answer 2

• business liability coverage for covered damages for which the insured is legally liable, subject to the applicable limit of insurance;
• supplementary payments for expenses associated with claims and suits defended by the insurer, in addition to the limits of insurance; and
• medical expenses in connection with an accident on the insured’s premises or involving the insured’s operations, regardless of fault, subject to the medical payments limit.

Question 3

Business liability coverage covers “sums the insured becomes legally obligated to pay as damages” for:

Answer 3

• bodily injury
• property damage (leased) (including fire or explosion damage to rented premises)
• personal and advertising injury

Question 4

Business liability Bodily injury includes:

Answer 4

injury, sickness, disease, and death.

Question 5

Business Property damage liability coverage applies to

Answer 5

physical damage to tangible property, including loss of use of the damaged property.

Question 6

Also included under property damage liability, but subject to a separate lower limit of insurance, is the insured’s tort liability for __ or __ damage to rented premises.

Answer 6

fire or explosion

Question 7

Personal and advertising injury consists of:

Answer 7

slander or libel
•a violation of privacy rights
•an invasion of right of private occupancy
•false arrest, detention, or imprisonment
•malicious prosecution
•copyright infringement
•trade dress, or slogan infringement in the insured’s advertising
•use of another’s advertising idea in the insured’s advertising.

Question 8

The most the insurer will pay for damages is the applicable limit of insurance. However, some related costs are payable in addition to the limit of insurance. These supplementary payments include

Answer 8

• investigation and defense costs (private investigator’s fees, attorneys’ fees, courts costs, etc.) until the limit of insurance is exhausted;
• prejudgment interest on the covered portion of the judgment; and
• post-judgment interest on the full amount of the judgment.

Question 9

In addition to covered damages for which the insured is legally liable and for supplementary payments, coverage is also provided for medical expenses made necessary by an accident associated with the insured’s premises or operations. Medical expenses are payable without regard to

Answer 9

Fault

Question 10

Limits: The liability and medical expenses limit applies per occurrence to bodily injury, property damage, and medical expenses: (4 $ amounts)

Answer 10

($300,000, $500,000, $1 million, or $2 million).

Question 11

Limits: The medical expenses limit applies per person to medical expenses ($ amount)

Answer 11

($5,000).

Question 12

Limits: The fire legal liability limit applies per occurrence to property damage by fire to premises rented to the insured $? The applicable limit for temporary locations is the highest limit shown in the declarations in cases where the declarations list more than one fire liability limit.

Answer 12

($50,000–$1 million).

Question 13

Limits: The products-completed operations aggregate limit is X times the liability and medical expenses limit and applies per policy period to all injury or damage from the products-completed operations hazard.

Answer 13

2

Question 14

Limits: The general aggregate limit is X times the liability and medical expenses limit and applies per policy period to all other injury, damage, or medical expenses.

Answer 14

2

Question 15

If the insured is a __ or __ , its members and partners and their spouses are covered, but only with respect to the conduct of the business.

Answer 15

partnership or joint venture

Question 16

If the insured is a limited liability company, its members are covered, but only with respect to ____ , and its managers are covered, but only with respect to their duties as managers.

Answer 16

the conduct of the business.

Question 17

If the insured is an organization other than a partnership, joint venture, or limited liability company, the__ __ and __ of the organization are covered with respect to their duties, and stockholders are covered with respect to their liability as stockholders.

Answer 17

executive officers and directors

Question 18

Employees and volunteer workers of the insured are also covered with respect to acts within ___ _ __ _ ____ . However, employees are not covered with respect to injury to the insured or to other employees in the course of employment

Answer 18

the scope of their employment

Question 19

Medical professionals employed by the insured are/are not covered with respect to their actions in providing or failing to provide medical care?

Answer 19

are not

Question 20

Exclusions: There is no coverage for bodily injury or property damage that is expected or intended from the standpoint of the insured except that resulting from…

Answer 20

reasonable use of force to protect people or property.

Question 21

Exclusions: There is no coverage for liability assumed by the insured in a contract, unless ____ OR unless the contract is an insured contract as defined in the policy

Answer 21

would have been liable even in the absence of that contract

Question 22

Exclusions: Contractual Liability: Insured contracts include:

Answer 22

• a premises lease
• an elevator maintenance agreement
• a railroad sidetrack agreement
• an easement or license agreement (except in connection with construction or demolition operations within 50 feet of a railroad)
• an agreement to indemnify a municipality that is required by ordinance
• any other contract pertaining to the business with respect to the insured’s assumption of another party’s tort liability to third persons

Question 23

Liquor Liability: This exclusion applies only if the insured is in the business of (5) __, __, __, __, or__. This exclusion does not preclude host liquor liability coverage for, say, an insurance agency that hosts a wine-and-cheese party to celebrate the opening of a new office.

Answer 23

manufacturing, distributing, selling, serving, or furnishing alcoholic beverages

Question 24

For firms in the liquor business, no coverage applies to __ or __ as a result of contributing to the intoxication of a person; furnishing alcoholic beverages to a person under the legal drinking age or under the influence of alcohol; or any law or regulation relating to the sale, gift, distribution, or use of alcoholic beverages.

Answer 24

bodily injury

property damage liability

Question 25

The pollution exclusion eliminates almost all coverage for claims arising from the release of pollutants, which are very broadly defined. In general, coverage remains only for bodily injury or property damage liability (but not cleanup costs) arising from

Answer 25

• most types of products or completed operations;
• some types of off-premises pollution releases, when the insured did not bring the pollutants to the site;
• the smoke, heat, and fumes released by a hostile fire;
• the escape of fuels, lubricants, or other operating fluids from mobile equipment;
• fumes from building heating equipment and from building cooling and dehumidifying equipment or equipment used to heat water for personal use by building occupants and guests; and
• fumes from materials used by the insured in off-site work.

Question 26

Auto, Watercraft, and Aircraft: There is no coverage for liability in connection with an aircraft, auto, or watercraft owned or operated by the insured, except for: (3) __, __, OR ___

Answer 26

• nonowned watercraft under 51 feet long
• watercraft onshore on the insured’s premises
• the parking of autos on or next to the insured’s premises.

Question 27

Transportation of Mobile Equipment: __ or __ arising from the transportation of mobile equipment by an auto owned or operated by the insured is not covered.

Answer 27

Bodily injury OR property damage

Question 28

There are several property damage exclusions. Property damage to premises sold, given away, or abandoned is not covered. Also not covered is property damage to property

Answer 28

owned, rented, or occupied by the insured (except for fire damage to premises leased to the insured—the fire legal liability limit applies to this coverage); property loaned to the insured; and personal property in the insured’s care, custody, or control. *** Does not apply to premises rented to the insured for a period of seven or fewer consecutive days (hotel rooms, for example).

Question 29

No coverage applies to property damage liability claims with respect to impaired property (property that has been rendered useless) that has not otherwise been damaged, if the impairment is caused by: (2) ___ or __

Answer 29

A defect in the insured’s product or work, or by the insured’s failure to meet contractual obligations.

Question 30

The ISO BOP’s medical expenses coverage does not apply to the bodily injury expenses of

Answer 30

an insured, a tenant, persons hired to do work for the insured, or a tenant of the insured, those whose medical expenses are payable under a workers compensation law, nor to injuries suffered while instructing, practicing, or participating in physical exercises, games, or sports.

Question 31

The businessowners liability coverage form provides three categories of coverage:

Answer 31

• Business Liability (for covered damages for which the insured is legally liable, subject to the applicable limit of insurance;)
• Supplementary Payments (for expenses associated with claims and suits defended by the insurer, in addition to the limits of insurance)
• Medical Expenses ( in connection with an accident on the insured’s premises or involving the insured’s operations, regardless of fault, subject to the medical payments limit)