AINS 23 Ch 10 Business Owners and Farm Insurance Exam Questions with
Correct Answers
Question 1:
Overview of the Businessowners Policy
Answer:
the businessowners policy (BOP) is widely used to insure eligible small to mid-size business
against most of their property and liability loss exposures
Question 2:
BOPs usually cover most of the property and liability loss exposures that can be insured under
the various ISO commercial package policy coverage parts. Most BOPs cover these common
exposures:-Buildings-Business Personal Property-Personal property of others-business income
and extra expense-premises and operations liability-products and completed operations
liability-employee dishonesty-theft of money and securities-forgery and alteration-equipment
breakdown
Answer:
Loss Exposures Covered by the BOP
Question 3:
Advantages of the BOP
Answer:
packaging several coverages reduces adverse selection and, combined with simplified rating,
lowers handling costs for insurers
Question 4:
Adverse Selection
Answer:
in general, the tendency for people with the greatest probability of loss to be the ones most
likely to purchase insurance
Question 5:
Need for BOP Eligibility Rules
Answer:
every insurer that writes BOPs has eligibility rules limiting its program applicants for which the
BOP approach is designed. These rules are needed because the rating structure of all BOPs
contemplates a relatively homogeneous group of small to mid-sized insuredswriting BOP
coverage for insureds that do not fall within this group can create a mismatch of premium
, Question 6:
Need for BOP Eligibility Rules
Answer:
every insurer that writes BOPs has eligibility rules limiting its program applicants for which the
BOP approach is designed. These rules are needed because the rating structure of all BOPs
contemplates a relatively homogeneous group of small to mid-sized insureds
writing BOP coverage for insureds that do not fall within this group can create a mismatch of
premium
and exposureBOP eligibility rules are based on criteria that relate to business size and
complexity of loss exposures
and exposureBOP eligibility rules are based on criteria that relate to business size and
complexity of loss exposures
and exposure
BOP eligibility rules are based on criteria that relate to business size and complexity of loss
exposures
and exposure
BOP eligibility rules are based on criteria that relate to business size and complexity of loss
exposures
Question 7:
Rating the BOP
Answer:
BOP property coverage is rated based on the amounts of coverage provided for building and
personal property. BOP property rates include loadings (build-in charge) for business income
and any additional coverages that are automatically includedISO BOP requires separate liability
rating for all classes of business. In calculatng the BOP liability premiums for most
classifications, the liability rate is applied to the property insurance amount rather than to a
rating basis such as that used to rate commercial general liability (CGL) coverage
Question 8:
Business Owners Property Coverage
Answer:
in most ways, the property coverage in a typical businessowners policy (BOP) is comparable to
the commercial property coverage that can be included in a commercial package policy
Correct Answers
Question 1:
Overview of the Businessowners Policy
Answer:
the businessowners policy (BOP) is widely used to insure eligible small to mid-size business
against most of their property and liability loss exposures
Question 2:
BOPs usually cover most of the property and liability loss exposures that can be insured under
the various ISO commercial package policy coverage parts. Most BOPs cover these common
exposures:-Buildings-Business Personal Property-Personal property of others-business income
and extra expense-premises and operations liability-products and completed operations
liability-employee dishonesty-theft of money and securities-forgery and alteration-equipment
breakdown
Answer:
Loss Exposures Covered by the BOP
Question 3:
Advantages of the BOP
Answer:
packaging several coverages reduces adverse selection and, combined with simplified rating,
lowers handling costs for insurers
Question 4:
Adverse Selection
Answer:
in general, the tendency for people with the greatest probability of loss to be the ones most
likely to purchase insurance
Question 5:
Need for BOP Eligibility Rules
Answer:
every insurer that writes BOPs has eligibility rules limiting its program applicants for which the
BOP approach is designed. These rules are needed because the rating structure of all BOPs
contemplates a relatively homogeneous group of small to mid-sized insuredswriting BOP
coverage for insureds that do not fall within this group can create a mismatch of premium
, Question 6:
Need for BOP Eligibility Rules
Answer:
every insurer that writes BOPs has eligibility rules limiting its program applicants for which the
BOP approach is designed. These rules are needed because the rating structure of all BOPs
contemplates a relatively homogeneous group of small to mid-sized insureds
writing BOP coverage for insureds that do not fall within this group can create a mismatch of
premium
and exposureBOP eligibility rules are based on criteria that relate to business size and
complexity of loss exposures
and exposureBOP eligibility rules are based on criteria that relate to business size and
complexity of loss exposures
and exposure
BOP eligibility rules are based on criteria that relate to business size and complexity of loss
exposures
and exposure
BOP eligibility rules are based on criteria that relate to business size and complexity of loss
exposures
Question 7:
Rating the BOP
Answer:
BOP property coverage is rated based on the amounts of coverage provided for building and
personal property. BOP property rates include loadings (build-in charge) for business income
and any additional coverages that are automatically includedISO BOP requires separate liability
rating for all classes of business. In calculatng the BOP liability premiums for most
classifications, the liability rate is applied to the property insurance amount rather than to a
rating basis such as that used to rate commercial general liability (CGL) coverage
Question 8:
Business Owners Property Coverage
Answer:
in most ways, the property coverage in a typical businessowners policy (BOP) is comparable to
the commercial property coverage that can be included in a commercial package policy
