FLETC BOP FINAL REVIEW SHEET LATEST
QUESTIONS AND SOLUTIONS GRADED A+
⩥ All of the following are covered under the liability portion of a
businessowners policy, EXCEPT:
Answer: - premises and operations
- fire legal
C - professional errors (The businessowners policy does not protect
against professional errors or negligence normally covered by
professional liability business insurance).
- products and completed operations
⩥ Gretchen's Travel Agency invites recent customers to a presentation at
which a time-share offer will be made. Gretchen serves cocktails and
snacks before and after the presentation. One of her guests becomes
inebriated and has an auto accident on the way home. He sues Gretchen.
How will the liability coverage of her BOP respond?
Answer: - Unless the host liability endorsement has been added to her
BOP, Gretchen has no coverage for this claim.
- The liquor liability exclusion precludes coverage for the guest's claim.
C - Because she is not in the beverage business, Gretchen has coverage
for this claim (The BOP's liquor liability exclusion applies only if the
insured is in the business of manufacturing, distributing, selling, serving,
or furnishing alcoholic beverages).
,- Unlike other commercial liability policies, the BOP has no liquor
liability exclusion, so Gretchen has coverage for this claim.
⩥ Frank, a certified professional accountant (CPA), overlooks a serious
error when auditing a client's financial records. When the client sues
Frank for damages, he submits the claim to the insurer that issued the
BOP that covers his rented office. What coverage applies?
Answer: - Since accounting errors involve advertising injury, coverage is
subject to the personal and advertising injury limit.
- None; the BOP excludes coverage for professional liability claims
(Frank has no coverage for this claim because of his BOP's professional
liability exclusion).
- Since audits are part of an accountant's work product, coverage is
subject to the products-completed operations limit.
- Since accounting errors involve personal injury, coverage is subject to
the personal and advertising injury limit.
⩥ The liability section of the BOP contains a number of exclusions for
property damage liability claims. Which one of the following is not
excluded?
Answer: - Damage to carpet cleaning equipment rented by the insured.
- Water damage to leased office premises.
C - Fire damage to a rented mercantile building (Fire damage to
premises leased to the insured is covered subject to the fire legal liability
limit).
,- Damage to a sink the insured plumber is installing.
⩥ Josephine's novelty store is protected by a businessowners policy
(BOP) that covers her building and business personal property. In what
situation will the personal and advertising injury liability coverage of
Josephine's BOP cover a claim?
Answer: - During the policy period Josephine receives a claim for
damages based on an act that took place before the policy's inception
date.
- Josephine publishes an ad that she knows is false advertising.
- Josephine sells a grill cleaning product that fails to clean a customer's
grill.
C - Josephine detains a suspected shoplifter who turns out to be innocent
(The BOP's personal and advertising injury coverage applies to wrongful
detention of the suspected shoplifter).
⩥ The BOP's personal and advertising injury liability coverage does not
apply to personal and advertising injury involving certain offenses
committed by
Answer: - minors
- firms in the entertainment business
- religious organizations
C - Internet service providers (The BOP provides no coverage for
personal and advertising injury committed by Internet service providers,
though this exclusion does not apply to some specific offenses).
, ⩥ Casual Clothing Store employees attend an out-of-town fashion show
where they spend three nights in a hotel room paid for by Casual. One of
these employees leaves the water running in the bath tub. A guest
occupying the room below hers complains of water leaking through his
bathroom ceiling. The hotel turns off the faucet and adds a substantial
sum to the employee's room bill to pay for the resulting property
damage. Casual Clothing submits the property damage claim to the
insurer that issued its BOP. What is true about how the BOP addresses
this claim?
Answer: C - The exclusion for damage to rented premises does not apply
to property rented for 7 or fewer days (Because the hotel room was
rented for fewer than 7 days, the property damage liability claim against
Casual is covered).
- Property damage to rented premises is not covered unless it is caused
by a fire.
- The damage was caused by negligence.
- Property damage to rented premises is not covered at all.
⩥ Morgan sent his store's customers a newsletter that included photos
from a recent business event that many of them attended. He had not
obtained permission to use these pictures, and one of the customers sued
him seeking damages for invasion of her privacy. According to Morgan's
businessowners policy (BOP),
Answer: - the claim is excluded because it involves a publication.
QUESTIONS AND SOLUTIONS GRADED A+
⩥ All of the following are covered under the liability portion of a
businessowners policy, EXCEPT:
Answer: - premises and operations
- fire legal
C - professional errors (The businessowners policy does not protect
against professional errors or negligence normally covered by
professional liability business insurance).
- products and completed operations
⩥ Gretchen's Travel Agency invites recent customers to a presentation at
which a time-share offer will be made. Gretchen serves cocktails and
snacks before and after the presentation. One of her guests becomes
inebriated and has an auto accident on the way home. He sues Gretchen.
How will the liability coverage of her BOP respond?
Answer: - Unless the host liability endorsement has been added to her
BOP, Gretchen has no coverage for this claim.
- The liquor liability exclusion precludes coverage for the guest's claim.
C - Because she is not in the beverage business, Gretchen has coverage
for this claim (The BOP's liquor liability exclusion applies only if the
insured is in the business of manufacturing, distributing, selling, serving,
or furnishing alcoholic beverages).
,- Unlike other commercial liability policies, the BOP has no liquor
liability exclusion, so Gretchen has coverage for this claim.
⩥ Frank, a certified professional accountant (CPA), overlooks a serious
error when auditing a client's financial records. When the client sues
Frank for damages, he submits the claim to the insurer that issued the
BOP that covers his rented office. What coverage applies?
Answer: - Since accounting errors involve advertising injury, coverage is
subject to the personal and advertising injury limit.
- None; the BOP excludes coverage for professional liability claims
(Frank has no coverage for this claim because of his BOP's professional
liability exclusion).
- Since audits are part of an accountant's work product, coverage is
subject to the products-completed operations limit.
- Since accounting errors involve personal injury, coverage is subject to
the personal and advertising injury limit.
⩥ The liability section of the BOP contains a number of exclusions for
property damage liability claims. Which one of the following is not
excluded?
Answer: - Damage to carpet cleaning equipment rented by the insured.
- Water damage to leased office premises.
C - Fire damage to a rented mercantile building (Fire damage to
premises leased to the insured is covered subject to the fire legal liability
limit).
,- Damage to a sink the insured plumber is installing.
⩥ Josephine's novelty store is protected by a businessowners policy
(BOP) that covers her building and business personal property. In what
situation will the personal and advertising injury liability coverage of
Josephine's BOP cover a claim?
Answer: - During the policy period Josephine receives a claim for
damages based on an act that took place before the policy's inception
date.
- Josephine publishes an ad that she knows is false advertising.
- Josephine sells a grill cleaning product that fails to clean a customer's
grill.
C - Josephine detains a suspected shoplifter who turns out to be innocent
(The BOP's personal and advertising injury coverage applies to wrongful
detention of the suspected shoplifter).
⩥ The BOP's personal and advertising injury liability coverage does not
apply to personal and advertising injury involving certain offenses
committed by
Answer: - minors
- firms in the entertainment business
- religious organizations
C - Internet service providers (The BOP provides no coverage for
personal and advertising injury committed by Internet service providers,
though this exclusion does not apply to some specific offenses).
, ⩥ Casual Clothing Store employees attend an out-of-town fashion show
where they spend three nights in a hotel room paid for by Casual. One of
these employees leaves the water running in the bath tub. A guest
occupying the room below hers complains of water leaking through his
bathroom ceiling. The hotel turns off the faucet and adds a substantial
sum to the employee's room bill to pay for the resulting property
damage. Casual Clothing submits the property damage claim to the
insurer that issued its BOP. What is true about how the BOP addresses
this claim?
Answer: C - The exclusion for damage to rented premises does not apply
to property rented for 7 or fewer days (Because the hotel room was
rented for fewer than 7 days, the property damage liability claim against
Casual is covered).
- Property damage to rented premises is not covered unless it is caused
by a fire.
- The damage was caused by negligence.
- Property damage to rented premises is not covered at all.
⩥ Morgan sent his store's customers a newsletter that included photos
from a recent business event that many of them attended. He had not
obtained permission to use these pictures, and one of the customers sued
him seeking damages for invasion of her privacy. According to Morgan's
businessowners policy (BOP),
Answer: - the claim is excluded because it involves a publication.
