The Businessowners Policy (BOP)—Property Provisions

Question 1

A BOP’s property coverage can apply to ___, ___ OR ___.

Answer 1

buildings, business personal property, or both

Question 2

Utility Services Exclusion: This exclusion precludes coverage for loss resulting not only from electrical power failure but also from the failure of other utility services—such as

Answer 2

water, Internet cable, telephone lines, satellite networks, cellular telephones, or other services—from a source away from the premises. Failure includes a reduction in capacity or supply. The exclusion applies whether the failure occurs on or away from the described premises.

Question 3

The utility services exclusion does not apply to loss or damage to computers and electronic data.

Answer 3

computers and electronic data.However, the electrical apparatus exclusion applies to some service. interruptions.

Question 4

A detailed “electrical apparatus” exclusion precludes coverage for various types of power surges. If a power surge leads to a fire, the ensuing fire is, however, covered. Another exception to the power surge exclusion provides that loss or damage to computers is covered if it is caused by an occurrence within

Answer 4

100 feet of the described premises that results in a power interruption, power surge, blackout, or brownout

Question 5

Limitations: •There is no coverage for damage by rain, snow, sleet, ice, sand, or dust to building interiors unless the damage is caused by

Answer 5

thawing of snow or ice on the building or the roof or walls are first damaged by an unexcluded cause.

Question 6

Limitations: •There is no coverage for loss to steam boilers, pipes, engines, and turbines, and loss to hot water boilers or other water heating equipment, if caused by conditions or events within the equipment. However, coverage does apply if the damage is caused by

Answer 6

an explosion of gases of fuel within the furnace, flues, or passages of a fired vessel.

Question 7

Limitations: •There is no coverage for property that is missing unless there is evidence to show what happened to it. Disagreement between a physical inventory and a computerized inventory might indicate a record-keeping error; it does not by itself mean that property has been stolen, lost, or destroyed. However, this limitation does not apply to

Answer 7

the money and securities optional coverage

Question 8

Limitations: A false pretenses or voluntary parting exclusion precludes coverage for property lost because

Answer 8

it has willingly been transferred to a person or place outside the described premises on the basis of unauthorized instructions.

Question 9

Limitations: Breakage of fragile articles is not covered. However, this limitation does not apply to

Answer 9

camera and scientific instrument lenses, containers of property held for sale, or glass that is part of a building.

Question 10

Limitations: •Theft coverage on especially susceptible property is limited to $2,500 for furs; jewelry (except for ___ ; or patterns, dies, molds, and forms.

Answer 10

items worth $100 or less per item)

Question 11

Limitations: Animals are not covered property in the 2010 edition of the BOP unless

Answer 11

they are the insured’s stock (as in a pet store) or owned by others and boarded by the insured (as in a kennel or animal hospital)

Question 12

Limitations: Even if an animal is covered property, loss or damage to the animal is not covered unless

Answer 12

the animal is killed or its destruction becomes necessary.

Question 13

Additional Coverages : Pollutant Cleanup and Removal: No coverage applies to costs of tests to assess the existence, concentration, or effects of the pollutants, but ___ is covered.

Answer 13

testing performed in the course of extracting pollutants from land or water

Question 14

Additional Coverages: Fire department service charges are covered up to $2,500, unless

Answer 14

a higher limit is shown in the declarations

Question 15

Preservation of Property:
If it is necessary to move covered property to another location to protect it from damage by a covered cause of loss, any loss to that property occurring during the move and for up to ____ at the new location will be covered.

Answer 15

30 days

Question 16

Additional Coverages : Coverage of $___ is provided for loss due to the insured having accepted counterfeit money or money orders that are not paid on presentation to the issuer.

Answer 16

$1,000

Question 17

Additional Coverages: Coverage is provided for loss due to forgery or alteration of any check, draft, promissory note, etc., issued by the insured or the insured’s agent or by someone impersonating the insured or the insured’s agent. The applicable limit is $___ unless a higher limit is shown in the declarations.

Answer 17

$2,500,

Question 18

Additional Coverages: Increased Cost of Construction:
Coverage applies to increased costs incurred to comply with ordinances or laws regulating the construction or repair of buildings or establishing zoning or land use requirements. The limit is $ ____ for each damaged building insured on a replacement cost basis.

Answer 18

$10,000

Question 19

Additional Coverages: Increased Cost of Construction:
If coverage is needed for demolition or increased cost of construction of undamaged portions of the property, it must be added by endorsement. The costs of complying with ordinances requiring the insured to test for or clean up for ____ is excluded.

Answer 19

pollutants, fungi, wet or dry rot, or bacteria.

Question 20

Additional Coverages: Coverage of $___ applies to the cost of recharging or replacing discharged fire extinguishing equipment.

Answer 20

$5,000

Question 21

Additional Coverages: Fire Extinguishing Systems Recharge Expense: If the discharge is accidental, this limit also applies to loss or damage to covered property from the accidental discharge. No coverage applies to loss from discharge during ___ or ___.

Answer 21

installation or testing.

Question 22

Additional Coverages: In case of covered damage from water, other liquids, powder, or molten material, the cost to ___ __ and ___ part of the building in order to repair the system from which the substance escaped is covered.

Answer 22

tear out and replace

Question 23

Additional Coverage: Coverage applies to the cost of replacing or restoring electronic data that has been destroyed or corrupted by a covered cause of loss, including from a computer virus. An annual aggregate limit of $___ applies, unless a higher limit is shown in the declarations.

Answer 23

$10,000

Question 24

Additional Coverage: The exclusions section of the businessowners form contains an exclusion of collapse except to the extent that coverage is provided in the form’s collapse additional coverage. The additional coverage then covers abrupt collapse when

Answer 24

it is caused by one of the policy’s specified perils.

Question 25

Temporary coverage of up to $250,000 per building applies to buildings under construction at the described premises and newly acquired buildings at other locations. Similarly, temporary coverage of up to $100,000 per building applies to business personal property at newly acquired premises and at newly constructed or acquired buildings at insured locations, and to newly acquired personal property at scheduled insured buildings. Coverage under this extension expires 30 days after ___ /___ , ___ OR ___, —whichever occurs first.

Answer 25

• acquisition or start of construction of the portion of the building that qualifies as covered property,
• when values are reported
• or when the policy expires

Question 26

A $2,500 limit is available to cover outdoor property, consisting of trees, shrubs, plants, detached signs, fences, and antennas. A sublimit applies to individual trees, shrubs, and plants. Covered perils for this extension are limited to (6), _____. Conspicuous by their absence are perils such as vandalism and windstorm, to which outdoor property can be especially susceptible.

Answer 26

fire, lightning, explosion, riot and civil commotion, and aircraft,

Question 27

Personal effects of the insured, the insured’s employees, and the insured’s partners and managers are covered, for up to $2,500 at each location. However, no coverage applies to loss by ___ and the extension does not apply to __ and __ used in the insured’s business.

Answer 27

A) Theft

B) tools and equipment

Question 28

Coverage is also provided for loss to valuable papers and records, including the cost to ___ and ___ information contained in valuable papers and records damaged by a covered cause of loss.

Answer 28

research and restore

Question 29

An exclusion specifically precludes accounts receivable coverage for loss due to ___ or ___, as well as loss caused by bookkeeping errors. The exclusion also precludes coverage for any claimed accounts receivable loss based solely on an audit or inventory computation.

Answer 29

falsification of records or other wrongdoing

Question 30

The ISO BOP form establishes two deductibles: one that is shown in the declarations as the “Deductible” and another that is shown in the declarations as the “Optional Coverage Deductible.” The “Deductible” might be referred to as the overall property coverage deductible. The “Optional Coverage Deductible” applies only to these optional coverages:

Answer 30

• money and securities
• employee dishonesty
• outdoor signs
• in the 2010 edition, forgery or alteration

Question 31

The Businessowners Policy (BOP)—Property Provisions: No dollar deductible applies to the following coverages:

Answer 31

• business income
• civil authority
• extra expense
• fire department service charge
• fire extinguisher systems recharge expense

Question 32

the “period of restoration” effectively imposes a time deductible of 72 hours for these two additional coverages:

Answer 32

business income and civil authority additional coverages

Question 33

The unendorsed businessowners form includes four popular optional coverages that would otherwise have to be purchased under separate policies or endorsements:

Answer 33

• outdoor signs
• mechanical breakdown (“equipment breakdown protection coverage” in the 2010 edition)
• employee dishonesty
• money and securities

Question 34

Four general conditions in the ISO BOP, which apply only to property coverage, are typical of those found in other property insurance forms and require no elaboration here. These conditions are:

Answer 34

• control of property
• mortgage holders
• no benefit to bailee
• policy period, coverage territory

Question 35

Unless modified by endorsement to provide named perils coverage, the property section of the ISO businessowners coverage form provides __ __ coverage. That is, it provides coverage for all causes of loss except those that are listed in the policy as excluded.

Answer 35

open perils

Question 36

A built-in building insurance inflation guard provision automatically and continuously increases the building coverage limits by an _ percent annual rate unless a different percentage is shown in the declarations. The inflation guard increases the available building limit by 1/365 of the applicable dollar amount each day of the year.

Answer 36

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