Part A

Michael owns a television repair shop that is insured under a commercial package policy. The policy includes the building and personal property coverage form and the causes-of-loss broad form. The declarations page indicates that coverage applies to both the building and the named insureds business property. Required:

Explain whether or not the following losses would be covered under his policy. A. A fire occurs on the premises, and the building is badly damaged. [5 marks] B. A burglar steals some money and securities from an unlocked safe. [5 marks] C. A business computer is damaged by vandals who break into the shop after business hours. [5 marks]

D. A hail-storm touches down near the store. Several television sets of customers in the shop

for repair are damaged in the storm. [5 marks]

Part B.

Richard owns and operates a small furniture store. In addition to Richard, the firm employs two sales representatives. Richards insurance agent advises him that the store can be insured under a businessowners policy (BOP).

Required:

Identify the various property loss exposures to Richards furniture store that can be covered by a businessowners policy. [10 marks]

[Total 30 marks]

Answers

Part A

(a) The causes-of-loss broad form provides coverage for fires. The building is covered property, and damage to the building from a fire is covered. (b) Covered property does not include money or securities. Thus, the loss is not covered. (c) A business computer and fax machine are covered as business personal property. Vandalism is a covered cause of loss under the causes-of-loss broad form. Thus the loss is covered. (d) Property of others in the insureds care, custody, or control is covered property. A tornado is a covered cause of loss. The loss is covered.

Part B

Loss exposures that can be covered by the BOP include the following: Damage to the building and inventory from a fire, lightning, or other covered cause of loss Damage to computers, desks, equipment, and other business personal property from a covered cause of loss Damage to property of others in the insureds care, custody, and control Loss of business income from a covered cause of loss Damage to outdoor signs as an optional coverage Losses from employee dishonesty as an optional coverage Theft of money and securities as an optional coverage Lawsuits arising out of injuries to customers injured on the premises Lawsuits arising out of injuries to customers because of defective products