Texas General Lines — Property and CasualtyCommercial LinesMedium
A small retail boutique has a Businessowners Policy (BOP) with a standard 'Special' causes of loss form. A thief breaks into the boutique after hours and steals several high-value items. The thief also smashes a display case and damages the front door. The owner files a claim for the stolen merchandise and the damage to the property. Under the BOP, how will this loss generally be handled?
- AOnly the damage to the property will be covered, as stolen merchandise is usually subject to a separate crime policy.
- BBoth the stolen merchandise and the property damage will be covered, subject to policy limits and deductibles.
- COnly the stolen merchandise will be covered, as the 'Special' form primarily covers theft.
- DNeither the stolen merchandise nor the property damage will be covered, as theft is typically excluded from a 'Special' form.
Show answer & explanationAnswer & explanation
Correct answer: B. Both the stolen merchandise and the property damage will be covered, subject to policy limits and deductibles.
The 'Special' causes of loss form provides 'open peril' coverage, meaning it covers all direct physical losses unless specifically excluded. Theft and vandalism are generally covered under this form, along with damage to the property.
Why the other options are wrong
- A. This is incorrect; a BOP with a 'Special' form typically includes coverage for stolen merchandise and property damage from theft/vandalism.
- C. This is incorrect; a 'Special' form covers more than just theft, and damage to property is also typically included.
- D. This is incorrect; theft is a commonly covered peril under a 'Special' form, and direct physical damage is also covered.
BOP Special Causes of Loss
In a Businessowners Policy (BOP), the 'Special' causes of loss form provides 'open perils' coverage, meaning it covers all direct physical losses unless they are specifically excluded.
- Provides broad 'open perils' coverage.
- Covers direct physical loss to covered property.
- Theft and vandalism are typically covered perils.
- Exclusions must be specifically listed in the policy.
Memory trick: Basic, Broad, Special – know your peril protection.