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. Assume you are a risk management consultant. Identify the major loss exposures that Kimberly faces. 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? Explain your answer. 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. 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? Explain your answer. Vandals broke an exterior glass window of the business, which caused substantial damage to the building. Is this loss covered by the BOP? Explain your answer

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

ChapterC: Cases

Section: Chapter Questions

Problem 5.2SB

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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.

Assume you are a risk management consultant. Identify the major loss exposures that Kimberly faces.
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? Explain your answer.
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.
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? Explain your answer.
Vandals broke an exterior glass window of the business, which caused substantial damage to the building. Is this loss covered by the BOP? Explain your answer

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