Unit 17 Cram Sheet

Who buys Businessowners Policies (BOP)?

Small businesses who need property, liability, and other coverages. These policies are used because CPP policies are too complex for smaller businesses

Coverage A

BOP Building Coverage including completed additions, permanently installed machinery and equipment, fixtures, personal property used to maintain or service buildings, additions under construction, alterations/repairs, and materials or temporary structures within 100 ft of the premises

Coverage B

BOP personal property

5 classes of business personal property

1- property owned and used by insured in the business

2- property of others in the insured’s care (so long as it’s not a customer)

3- tenants’ improvements

4- exterior building glass

5- leased personal property that the insured has a contractual responsibility to insure

Coverage B condition to be insured

the personal property must be located at the insured location in or on the building, in a vehicle, or in the open within 100 ft of the premises

What type of peril are BOP forms

Open perils. Common exclusions apply as well as dishonest employee acts, pollution, and damage from animals/insects

3 common requirements to get a BOP

1- less than 100 employees

2- Revenues of $6 mil or less

3- business occupied 35,000 ft2 of less

Types of businesses likely to get BOP

Retail, apartments, service businesses, wholesale distributers, contractors, small restaurants

Debris Removal & Collapse

Automatically included

debris - 25% of loss ( plus additional $25,000 if necessary

collapse - caused by weight or hidden cause like decay or insect damage

Loss of Business Income, Extra Expense, & increased cost of construction

Automatically Included

All additional coverages included automatically

loss of income & extra expense both within 1 yr and aren’t subject to limits

Action of civil authority, forgery, business income from dependent properties

Automatically included

civil - insured can’t access property losses begin 72 hrs after action

forgery - $2500 limit

business income - $5000 limit - begin 72 hrs after action

Dependent property

businesses that deliver materials, manufacture products for delivery, or attract customers to the insured’s business

Electronic data, fungi/bacteria, and money order counterfeit

Automatically included

electronic - $10,000 aggregate limit

fungi - $15,000 aggregate

counterfeit - $1000

Pollutant cleanup, preservation of property, & fire department service charge

Automatically included

pollutant - $10,000 aggregate

preservation - covers moving and temporarily storing property elsewhere for 30 days

fire department - $2500

water/liquid damage, glass, fire extinguisher recharge

glass - covers temporarily boarding up windows

recharge - $5000 per occurrence

4 coverage extensions

1- newly acquired building & personal property

2- trees and detached signs

3- personal property of others

4- valuable papers and recordsN

Newly acquired

buildings - $250,000 per location for 30 days

personal property - $100,000 for 30 days

Trees and detached signs

per tree - $1000

aggregate = $2500

Personal property of others and valuable records

personal property of others = employees belongings

valuable records = $10,000

4 optional coverages

*Require additional premium

1- Employee dishonesty (when discovered while policy in effect or within 1 yr)

2- Mechanical Breakdown (sudden on premises)

3- Outdoor signs

4- money and securities loss from theft or destruction

Standard deductible for BOP

$500 that applies to All building and personal property

4 business liability coverage

1- bodily injury (if due to insured’s negligence)

2- property damage

3- personal and advertising injury

4- cost to defend up to policy limits

*Must occur during the policy period and territory

Supplementary payments

BAILED

bonds - $250 max

loss of earnings = $250 per day

Medical Payments

Paid regardless of fault up to 1 yr from accident. Insured and employees excluded

Examples of personal and advertising injury exclusions

intentional injury, injury arising from oral or written publication that was published before the beginning of the policy period, injury arising out of wrong description of products, arising out of infringement of copyright, trade secrets, patents, etc

if insured is an individual who else is included

spouse only

if insured is a partnership of individuals, who else is included

each partners’ spouse

if insured is a limited liability company, who else is included

members and managers

if insured is a corporation, who else is included

officers and directors

Regardless of names insured type, who is always included

named insured’s employees and their representative if deceased

Limits of liability for bodily injury/property damage, personal and advertising injury, and no fault medical payments

1- per occurrence

2- per person / organization

3- per person

fire legal and aggregate limits

fire legal - per fire

aggregate - 2x limit of liability & medical expenses, 1 aggregate for products and completed operations and general aggregate for all other claims

Utility service - direct damage vs. utility service - time element

*Both are endorsements

direct damage - damage to property caused by interruption of service

time element - loss of income or extra expense due to interruption of service

Hired auto and nonowned auto liability

Endorsement that provides liability for rented, leased, borrowed, and employee-owned vehicles.

*Applies only if the business doesn’t have a commercial auto insurance

*Covers business liability, NOT the person driving

Protective safeguards

under endorsements section but works more like a warranty/condition

Requires sprinklers, burglar alarms, etc.

*If insured does not maintain the correct protective safeguards, coverage is cancelled with no prior notice

conditions for property coverage & liability (2 each)

Property - Property general conditions and property loss conditions

liability - liability general conditions and medical general conditions