Assume you are a risk management consultant. Identify the major loss exposures that Kimberly faces. b. Assume that a covered loss occurs in July, which damages part of the inventory. Does the BOP provide any protection for the increase in inventory during the summer months? c. Kimberly plans to hire an additional employee during the summer months when sales are increasing. She is concerned about possible employee theft and dishonesty. Explain to Kimberly how this loss exposure can be handled under the BOP.
Q3: Kimberly owns and operates a tennis shop in a resort area. The business is seasonal. A large
part of the annual revenues are due to sales in June, July, and August. Kimberly keeps the
shop open during the remaining months of the year, but the inventory carried during those
months is reduced. During the summer months, the amount of inventory on hand is
substantially increased. Kimberly has the business insured under the special form
businessowners policy (BOP) with no endorsements attached.
a. Assume you are a risk management consultant. Identify the major loss exposures that
Kimberly faces.
b. Assume that a covered loss occurs in July, which damages part of the inventory. Does the
BOP provide any protection for the increase in inventory during the summer months?
c. Kimberly plans to hire an additional employee during the summer months when sales are
increasing. She is concerned about possible employee theft and dishonesty. Explain to
Kimberly how this loss exposure can be handled under the BOP.
d. A fire damaged the building. As a result, Kimberly incurred a business income loss because
the business was closed for three months. Is this loss covered by the BOP?
e. Vandals broke an exterior glass window of the business, which caused substantial damage to
the building. Is this loss covered by the BOP?
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