BASIC FACT PATTERN. J \& B Home Builders, Inc. ("J \& B") is an Iowa corporation with its principal place of business in Cedar Rapids, Iowa. It is owned by John Smith, who employs a total of six (6) individuals including him. His spouse, Beth Smith, is the Office Manager and performs all of the accounting functions and provides assistance with bids. The other four (4) employees, like John, are framing and finish carpenters who are capable of all residential and building work including remodeling activities. The business has an average of $2,000,000 of revenue annually. The following supplemental information represents some of the insurance coverages issued to the business by Dependable Insurance Company. Bill Best is the insurance agent for J \& B. and the policies are issued to J \& B through Bill's independent insurance agency, Best Insurance Agency, Ltd., also located in Cedar Rapids. Question 1 (5 parts) : I. Supplemental Information. J \& B has procured a business owner policy (BOP) that contains a commercial general liability policy (CGL) with each occurrence limit of $1 million, a personal and advertising injury limit of $1 million, a general aggregate limit of $2 million, and a product completed operations aggregate limit of $2 million. Damage to premises rented to J \& B - \$100,000 on any one premise and medical expense of $5,000 for any one person. Any and all other incidental coverages contained within the CGL are established at minimum levels. J \& B has also procured a commercial excess liability (umbrella) - following form with each occurrence limit (liability coverage) of $1 million; personal and advertising injury limit (any one person or organization) of $1 million; and aggregate limit (liability coverage - except with respect to "covered autos") of \$1 million. What dollar amount, if any, will J \& B's BOP insurer (including umbrella carrier) pay for each of the following losses that occurred during the policy period and why or why not will it pay the loss? If the loss is not covered, or not fully covered, explain why. Assume that each loss would be paid in the order presented. A. J&B is remodeling a kitchen in a personal residence. The flooring is subcontracted to Hardwood Flooring Specialists LLC who installs a custom peg and plank wood floor but does not finish it pending installation of cabinets and appliances. A J \& B worker drops a tool in the middle of the floor while in the process of installing the cabinets damaging the flooring. Hardwood Flooring Specialists must remove existing flooring to repair the damaged board at an increased cost of labor and materials of $7,500 and seeks reimbursement from J \& B who, in turn, seeks liability coverage from Dependable Insurance Company. Does Dependable Insurance Company pay the claim? Why or why not? (5 POINTS) B. The homeowner trips and falls because a J \& B employee failed to pick up a tool before leaving the job site for the day. The homeowner breaks her leg and seeks damages of $100,000 from J\&B. (5 POINTS) C. A plumber contracted by J \& B installs a dishwasher and a refrigerator which dispenses water in the kitchen. The shut off valve to both appliances located in the basement of the home malfunctions 6 months after the remodeling job is finished. Water damage to the ceiling, flooring and furniture located in the finished basement of the home creates damages of $250,000 which the homeowner's insurance carrier pays. The insurance carrier seeks reimbursement from J \& B. (5 POINTS) D. A J \& B employee is injured when a granite countertop falls on his foot while installing it. The employee's spouse sues J \& B for loss of consortium during the employee's recovery period. A jury ultimately awards her $25,000. (5 POINTS) E. Three years after the remodeling job is completed Bill Best renews the BOP coverages using a different carrier, Reliable Insurance Company. A fire ensues in the remodeled 2 kitchen caused by faulty electrical work which was completed by an electrician hired by J \& B. The homeowner's insurance carrier seeks subrogation from J \& B for damages in the amount $150,000. J \& B turns the claim into Bill Best for processing. Will Dependable Insurance Company pay the loss? Why or why not? (5 points)