Property and Casualty Insurance Practice Exam

What type of insurance is provided by a Business-Owners Policy (BOP)?

1. Only property insurance for large corporations

2. Liability insurance exclusively for non-profits

3. Property and liability insurance for small businesses

4. Health insurance for small business employees

The correct answer is: Property and liability insurance for small businesses

A Business-Owners Policy (BOP) is specifically designed to meet the needs of small businesses by providing a comprehensive package of insurance. It typically includes both property insurance, which protects covered physical assets such as buildings and equipment against various risks like fire or theft, and liability insurance, which protects the business against claims arising from injuries or damages to third parties. This combination of coverage is beneficial for small businesses because it simplifies the insurance purchasing process and can offer cost savings since bundling coverage often results in lower premiums than purchasing each type of insurance separately. Such a package is particularly suited for small business owners who may not have the same extensive insurance needs as larger corporations but still require protection against significant financial risks. The other options do not accurately represent the nature of a BOP: it is not limited to large corporations, does not provide only liability insurance for non-profits, and certainly does not cover health insurance for employees. Thus, the defined nature of a BOP clearly makes it most applicable to small businesses needing both property and liability coverage.