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FIL 350 - Chapter 11
Businessowners Policies
| Question | Answer |
|---|---|
| Businessowners Policy (BOP) | - Designed for small/medium sized businesses - Simple alternative to CPP - Provides both prop and liability coverage |
| Advantages of BOP | - One policy meets insurance needs of many - Packaging coverages reduces adverse selection and streamlines costs - Simplified rating (easier for agents/brokers) - More automation in underwriting decisions |
| BOP eligibility requirements | - Size constraints (ex: max square foot of bldg = 35,000 ft or 6 story max) - Annual sales restriction (up to $6 million) - Occupancy restrictions - Lower complexity of exposures |
| Basic structure of BOP | - Section I: property insurance similar to BPP, and business income coverage (w/ extra expense) - Section II: Liability similar to CGL |
| Differences between BOP and BPP - direct property coverage | - Two separate limits: bldg & PP - Personal Prop includes prop in care, custody, control of insured - Fewer exclusions - Broader coverage for E-data & computers (dmg due to breakdown or power surges, utility services- $10k limit), theft of supplies |
| 3 Differences between BOP and BI + EE | 1. No coinsurance requirement or penalty under the BI portion of BOP 2. BOP limit is 12 months of BI + EE, no dollar deductible 3. Payroll is ltd to 60 days after direct loss |
| Additional Coverages in BOP | - Same six as BPP but more coverage and limits for E-data - Same BI additional coverages for civil authority, EBI after reopening, interruption of computer operations |
| Unique Additional Coverages in BOP | - BI for dependent properties (up to $5k) - Some crime insurance agreements: forgery or alteration up to $2.5k, money orders and counterfeit $ up to $1k. - Recharge expense for fire extinguishing systems up to $5k |
| BOP Coverage Extensions | - Many similar to BPP: newly acquired prop, PP off premises ($10k), outdoor prop, personal effects ($2.5k), valuable papers & records ($10k) - Damage to customer records (up to $10K, similar to valuable papers provision) |
| Optional coverages in BOP | - Outdoor signs. - Limited form of mech breakdown that only covers prop dmg (non-mfg boilers, small AC units, some additional protection) - Crime insurance (employee dishonesty, $/securities) |
| BOP Liability coverages | - Business liability (bodily injury & prop dmg (CGL Cov A), personal/adv injury (Cov B). - Medical expenses (Cov C) - Legal defense |
| BOP Liability exclusions | Professional liability, but endorsements are available for some - Auto liability |
| Seasonal Increase Provision | Enables fluctuation of personal property values by increasing amount of insurance for certain tie periods by 25% if limit is 100% or more of insured's average monthly personal property value for twelve months preceding loss. |
| What cause of loss form property coverage is the BOP similar to? | Special Form Causes of Loss because property coverage has open perils coverage. |
| What method of valuation is typically used for settlement of building and personal property? | Replacement value. |
Created by:
FIL350
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