The Businessowners Policy (BOP)—Selected Endorsements

Question 1

Endorsements to a BOP can also broaden, limit, clarify, or otherwise modify a policy. Typical Endorsements:

Answer 1

• protective safeguards
• utility services—direct damage
• utility services—time element
• hired auto and nonowned auto liability
• identity fraud expense coverage

Question 2

The ___ ____ endorsement makes maintenance of the safety preventative equipment that are identified in the endorsement schedule (such as an automatic sprinkler system) a condition of coverage.

Answer 2

Protective Safeguards (BP 04 30)

Question 3

Protective Safeguards (BP 04 30): there is no coverage for loss by fire if:

Answer 3

• the insured knew of an impairment in the protection device and failed to notify the insurer
• if the insured failed to maintain the scheduled protective safeguards, which were under the insured’s control, in “complete” working order.

Question 4

Protective Safeguards (BP 04 30): An exception is made for automatic sprinkler systems shutoff as a result of __, __, __, or ___ . In this case, the insured is not required to notify the insurer of the impairment if the insured restores full protection within 48 hours.

Answer 4

breakage, leakage, freezing conditions, or opening of sprinkler heads

Question 5

Utility Services—Direct Damage (BP 04 56): Some businesses are susceptible to property damage if their utility services are interrupted. For example, a power outage could ruin perishable food. However, the businessowners policy contains an exclusion of loss resulting from an ___ or other utility service originating away from the insured’s premises.

Answer 5

interruption of power

Question 6

Utility Services—Direct Damage (BP 04 56): The utility services—direct damage endorsement adds coverage for damage to the insured’s property resulting from an interruption in any of the utility services identified in the __ . (Note, however, that no coverage applies to loss to the insured’s electronic data.) Loss caused by damage to overhead transmission lines must be specifically included or specifically excluded in the endorsement schedule.

Answer 6

endorsement schedule

Question 7

Utility Services—Direct Damage (BP 04 56): For coverage to apply, the service interruption must be the result of damage to utility company property from a ____ , such as fire or windstorm. This means, for example, that no coverage is provided for damage caused by a service interruption that is the result of mechanical breakdown of the utility company’s equipment.

Answer 7

covered cause of loss

Question 8

Utility Services—Direct Damage (BP 04 56): As its title suggests, this endorsement provides coverage for direct damage loss only. Coverage for ___ or ___ resulting from utility service interruption must be purchased separately, using the utility services—time element endorsement discussed below.

Answer 8

business income OR extra expense losses

Question 9

Utility Services—Time Element (BP 04 57): Many (perhaps most) businesses would suffer income or expense losses if their utility services were interrupted for a significant length of time. However, in the absence of this endorsement, the businessowners policy ____ ___ for losses resulting from an interruption of power or other utility service originating away from the insured’s premises.

Answer 9

excludes coverage

Question 10

This endorsement provides coverage for income or expense loss suffered by the insured as a result of an interruption in utility service.

Answer 10

Utility Services—Time Element (BP 04 57)

Question 11

adds coverage for damage to the insured’s property resulting from an interruption in any of the utility services identified in the endorsement schedule.

Answer 11

Utility Services—Direct Damage (BP 04 56)

Question 12

Utility Services—Time Element (BP 04 57): Coverage can apply to loss from damage to any of the following types of utility service property:

Answer 12

water supply
communication supply (including or excluding transmission lines)
and power supply (including or excluding transmission lines.

Question 13

Hired Auto and Nonowned Auto Liability (BP 04 04): The hired auto and nonowned auto liability endorsement is appropriate for use by an insured that does not own any automobiles. It provides coverage for bodily injury and property damage liability in connection with ___, ___ or ___ as indicated in the endorsement schedule.

Answer 13

just hired automobiles,
just nonowned automobiles,
or both,

Question 14

If hired auto liability coverage is purchased, coverage applies to bodily injury or property damage arising out the ___ or __ by the insured or the insured’s employees in the course of the insured’s business.

Answer 14

maintenance or

use of a hired auto

Question 15

A “hired auto” is defined in the endorsement to be any auto ___, ___, ___ or ___ by the insured. An automobile rented by an executive while traveling on company business is an example of a hired auto. A personal auto used by an employee to deliver a business package is an example of a nonowned auto.

Answer 15

rented, leased, hired, or borrowed

Question 16

Hired auto liability coverage does cover damage to the rented vehicle itself.

Answer 16

False. It for LIAB only.

Question 17

Hired auto liability coverage applies only to liability for injury to others and liability for damage to other vehicles (and other property).

Answer 17

True

Question 18

Nonowned auto coverage protects the insured business against lawsuits arising from the use of employee-owned vehicles on company business and employees benefit from this protection.

Answer 18

False. Employee do not benefit. It protects the business from liab only.

Question 19

Hired Auto and Nonowned Auto Liability (BP 04 04): an employee (including a partner or executive officer) using his or her own car on company business must rely on his or her personal insurance auto policy for both liability to others and for any damage to the employee-owned vehicle.

Answer 19

True

Question 20

Identity Fraud Expense Coverage (BP 14 01): This endorsement provides coverage for specified expenses incurred by the insured as a direct result of acts of “identity fraud” that are first discovered or learned of during…

Answer 20

the policy period

Question 21

Identity Fraud Expense Coverage (BP 14 01): Unless a different limit is shown in the endorsement schedule, a limit of $25,000 applies to ___ included in the endorsement’s defined term “ __ .”

Answer 21

expenses, expenses

Question 22

Identity Fraud Expense Coverage (BP 14 01): a limit of $5,000 applies to ___ ___ incurred to restore the insured’s reputation as a result of acts of “identify fraud” first discovered or learned of during the policy period.

Answer 22

advertising expenses

Question 23

Identity Fraud Expense Coverage (BP 14 01): The coverage of the endorsement is subject to a___ $__ deductible.

Answer 23

single $250 .