BOP v. CPP
Which of the following is a primary advantage of a Business Owners Policy (BOP) compared to a Commercial Package Policy (CPP)?
A) More customizable coverage options
B) Typically lower premiums for small businesses
C) Broader coverage for high-risk businesses
D) Coverage for multiple types of businesses
B) Typically lower premiums for small businesses
Which of the following coverages is typically included in a BOP?
A) Workers' compensation
B) Commercial auto insurance
C) Business personal property
D) Professional liability
C) Business personal property
Which of the following is typically excluded from coverage under a BOP?
A) Fire damage
B) Theft of business property
C) Employee dishonesty
D) Business interruption
C) Employee dishonesty
Which of the following best describes the structure of a Commercial Package Policy (CPP)?
A) A single policy that combines multiple coverages
B) A policy that only covers property damage
C) A policy that cannot be customized
D) A policy that is only available for large corporations
A) A single policy that combines multiple coverages
True or False: Implementing a comprehensive employee training program is considered a form of risk reduction because it helps prevent accidents and injuries in the workplace.
True
A small retail store owner is considering insurance options. If they choose a BOP, which of the following coverages is most likely included?
A) Professional liability coverage
B) Business interruption coverage
C) Cyber liability coverage
D) Equipment breakdown coverage
B) Business interruption coverage
In a CPP, which of the following is NOT a standard coverage part?
A) Commercial property
B) Commercial general liability
C) Business income
D) Personal auto
D) Personal auto
In a CPP, which of the following would likely be excluded from coverage?
A) Damage caused by a natural disaster
B) Liability for employee injuries
C) Accidental damage to property
D) Intentional acts by the insured
D) Intentional acts by the insured
In a BOP, the term "business personal property" refers to which of the following?
A) The building owned by the business
B) Inventory and equipment used in the business
C) Personal property of the business owner
D) Property leased from another party
B) Inventory and equipment used in the business
Which of the following is a common loss control measure that businesses can implement to minimize liability risks?
A) Increasing deductibles
B) Regular employee training
C) Reducing coverage limits
D) Purchasing additional insurance
B) Regular employee training
Which of the following statements is true regarding the flexibility of coverage in a CPP compared to a BOP?
A) A CPP offers less flexibility in coverage options.
B) A BOP is more customizable than a CPP.
C) A CPP can be tailored to meet the specific needs of a business.
D) A CPP is only available for large businesses.
C) A CPP can be tailored to meet the specific needs of a business.
A small bakery has a BOP that includes coverage for equipment breakdown. If their oven fails and causes a loss of income, which coverage would apply?
A) Business personal property
B) Business interruption coverage
C) Equipment breakdown coverage
D) General liability coverage
B) Business interruption coverage
A restaurant owner discovers that their BOP does not cover losses due to food spoilage caused by a power outage. This is an example of what type of policy limitation?
A) Coverage limit
B) Exclusion
C) Deductible
D) Endorsement
B) Exclusion
A business owner is reviewing their CPP and notices a "deductible" listed in the policy. What does this term refer to?
A) The maximum amount the insurer will pay for a claim
B) The amount the insured must pay out of pocket before coverage kicks in
C) The total premium paid for the policy
D) The coverage limit for liability claims
B) The amount the insured must pay out of pocket before coverage kicks in
A business owner is considering purchasing additional coverage for cyber liability. This decision is an example of which risk management strategy?
A) Risk avoidance
B) Risk retention
C) Risk transfer
D) Risk reduction
C) Risk transfer
A contractor needs coverage for both general liability and property damage. Which policy type would likely provide the most comprehensive coverage?
A) BOP
B) CPP
C) Builder's Risk Policy
D) Commercial Inland Marine
B) CPP
Which coverage in a CPP is designed to protect against claims of bodily injury or property damage to third parties?
A) Business income
B) Commercial general liability
C) Property damage
D) Professional liability
B) Commercial general liability
Which of the following is a common limitation found in both BOPs and CPPs regarding property coverage?
A) Coverage for all types of property
B) Coverage for property in transit
C) Coverage for property owned by others
D) Coverage for property used for personal purposes
D) Coverage for property used for personal purposes
Which of the following terms refers to the period during which a policyholder can report a claim after the policy has expired?
A) Grace period
B) Coverage period
C) Claims period
D) Reporting period
D) Reporting period
Which of the following is an example of risk retention in a business context?
A) Purchasing additional insurance to cover potential losses
B) Setting aside funds to cover potential losses instead of buying insurance
C) Implementing safety measures to prevent accidents
D) Transferring risk to a third party through a contract
B) Setting aside funds to cover potential losses instead of buying insurance
Which of the following is a key difference between a BOP and a CPP regarding the types of businesses they are designed for?
A) BOPs are typically for small to medium-sized businesses, while CPPs are for larger or more complex businesses.
B) BOPs are designed for larger businesses, while CPPs are for smaller businesses.
C) BOPs cover only retail businesses, while CPPs cover all types of businesses.
D) There is no difference; both policies serve the same purpose.
A) BOPs are typically for small to medium-sized businesses, while CPPs are for larger or more complex businesses.
A business owner wants to ensure their property is covered for replacement cost rather than actual cash value. Which policy component should they focus on?
A) Business income coverage
B) Property coverage
C) Liability coverage
D) Equipment breakdown coverage
B) Property coverage
A business owner is concerned about liability for damages caused by their product. Which of the following would typically NOT be covered under a standard BOP?
A) Product liability
B) Completed operations liability
C) Professional liability
D) Premises liability
C) Professional liability
In a BOP, the "aggregate limit" refers to:
A) The total amount of coverage available for a single claim
B) The maximum amount the insurer will pay for all claims during the policy period
C) The minimum amount of coverage required by law
D) The total premium paid for the policy
B) The maximum amount the insurer will pay for all claims during the policy period
A business implements a fire safety program to reduce the risk of fire damage. This is an example of which type of loss control measure?
A) Risk transfer
B) Risk avoidance
C) Risk reduction
D) Risk retention
C) Risk reduction