Hawaii Insurance License Practice Exam

Which of the following types of buildings would be eligible for coverage under a Businessowners Policy (BOP)?

1. A single-family home

2. A six-story apartment building

3. A five-acre commercial site

4. A standalone garage

The correct answer is: A six-story apartment building

A Businessowners Policy (BOP) is designed to provide coverage for small to medium-sized businesses and typically includes buildings that are occupied by the insured for business purposes. These policies are often tailored for specific types of operations and usually extend coverage to buildings that serve commercial purposes, such as offices, retail spaces, and certain types of residential properties. The correct choice refers to a six-story apartment building, which can qualify for a BOP if it meets specific criteria related to its use, occupancy, and compliance with insurance guidelines. Apartment buildings can be insurable under a BOP if they contain a certain number of units (generally fewer than six), are used for residential purposes, and the owner operates the building in a manner that aligns with the BOP’s terms. This aligns well with the policy's intent to cover business risks associated with property used for rental income. In contrast, a single-family home is generally not eligible for a BOP as it is considered a personal dwelling rather than a commercial property. A five-acre commercial site could be too expansive or may involve various risks not suitable for BOP coverage. A standalone garage, unless used in a commercial context (for example, as a repair shop), would not typically meet the criteria needed for coverage