7.6 Businessowners Liability Coverage Form, Common Policy Conditions & Selected BOP Endorsements

Businessowners Liability Coverage Form, Common Policy Conditions & Selected BOP Endorsements

Exam Focus: The Businessowners (2010) Policy is an 8% domain on the Series 17-70 — a larger share than Surety, Fidelity and both Aviation domains combined. Section 7.3 covered eligibility and the property side. This section finishes the domain: the liability coverage form, the common policy conditions, and the five selected endorsements the outline names by number.

---

The Businessowners Liability Coverage Form

The BOP liability section is a simplified CGL. It reaches the same exposures as the Commercial General Liability form of Section 8.2, written in fewer words and with a different limit architecture.

The Coverages

• Business Liability. The insurer pays sums the insured becomes legally obligated to pay as damages because of bodily injury, property damage or personal and advertising injury to which the insurance applies, and has the duty to defend. Unlike the CGL, the BOP merges the CGL's Coverage A and Coverage B into a single Business Liability insuring agreement subject to one limit.
• Medical Expenses. Pays reasonable medical expenses for bodily injury caused by an accident on the insured's premises, on ways next to the premises, or because of the insured's operations — regardless of fault — provided the expenses are incurred and reported within one year of the accident and the injured person submits to examination at the insurer's request.

Who Is an Insured

The pattern follows the CGL:

• If the named insured is an individual, the insured is that person and the spouse, but only for the conduct of a business of which they are the sole owner.
• If a partnership or joint venture, the partners or members and their spouses.
• If a limited liability company, the members (for the conduct of the business) and the managers (for their duties as managers).
• If an organisation other than those, the executive officers and directors for their duties, and the stockholders for their liability as stockholders.
• Employees and volunteer workers are insureds for acts within the scope of employment or duties — but not for bodily injury to a co-employee or to the named insured or partners, not for property damage owned or occupied by or rented or loaned to an employee or co-employee, and not for professional health care services.
• Newly acquired or formed organisations are insureds for up to 90 days or the end of the policy period, whichever is earlier.

Limits of Insurance

• Liability and Medical Expenses Limit — the most payable for the sum of all damages and medical expenses arising out of any one occurrence.
• Medical Expenses Limit — a per-person sub-limit inside the occurrence limit.
• Damage to Premises Rented to You Limit — a separate sub-limit for property damage to premises, including contents, rented to the insured or temporarily occupied with the owner's permission (the fire legal liability successor).
• Aggregate Limits. The BOP applies a general aggregate and a separate products-completed operations aggregate, generally set as a multiple of the occurrence limit.

Exclusions

The BOP liability exclusions track the CGL: expected or intended injury, contractual liability (with the insured-contract carve-back), liquor liability for those in the business, workers' compensation and employer's liability, employment-related practices, pollution, aircraft, auto or watercraft, mobile equipment transportation, war, the business risk exclusions for damage to the insured's own product and work, recall, personal and advertising injury offences committed knowingly or with prior publication, and the professional services exclusion. Section 8.2 develops each of these.

Exam Discrimination — BOP versus CPP. The BOP packages property and liability into a single simplified contract for small and mid-sized eligible risks and builds in features (business income with no separate limit for a 12-month actual loss sustained period, automatic inflation guard, replacement cost, seasonal increase) that a Commercial Package Policy would have to endorse. The CPP is modular — you select commercial property, CGL, crime, inland marine and auto separately — and is the only choice once the insured exceeds BOP eligibility.

---

Businessowners Common Policy Conditions

The BOP common policy conditions form governs the whole contract:

• Cancellation. The first named insured may cancel by mailing or delivering advance written notice. The insurer may cancel by mailing or delivering written notice to the first named insured; in New York the notice periods and permitted grounds are those of Insurance Law § 3426 (Section 1.4) — 20 days in the first 60 days, 15 days thereafter on enumerated grounds, and 60 to 120 days for nonrenewal or conditional renewal.
• Changes. The policy contains all the agreements between the parties; the first named insured is authorised to make changes with the insurer's consent, effected by endorsement.
• Concealment, Misrepresentation or Fraud. The policy is void in case of fraud, and in case of intentional concealment or misrepresentation of a material fact concerning the policy, the covered property, the insured's interest, or a claim.
• Examination of Your Books and Records. The insurer may examine and audit the insured's books and records relating to the policy at any time during the policy period and for three years afterward.
• Inspections and Surveys. The insurer has the right, but no duty, to make inspections and recommendations — and inspections are not a safety inspection or a warranty that conditions are safe or healthful.
• Premiums. The first named insured is responsible for payment and is the payee for any return premium.
• Transfer of Rights and Duties. Rights and duties under the policy may not be transferred without the insurer's written consent, except to a legal representative on the named insured's death.
• Liberalization. If the insurer adopts a revision that broadens coverage without additional premium within 45 days before or during the policy period, the broadened coverage applies automatically.
• Other Insurance, Legal Action Against Us, and Transfer of Rights of Recovery (subrogation) operate as in Sections 3.2 and 3.4.

---

Selected BOP Endorsements

Claims Cue. A restaurant loses power for three days after a covered cause of loss damages the utility's substation. Spoiled food is BP 04 56. The three days of lost profit is BP 04 57. Without both endorsements the BOP answers neither, because the loss to the covered property was not caused by a covered cause of loss at the described premises.