Arizona Adjuster Practice Exam

Is Naples Pizza eligible for a businessowners policy (BOP), and why or why not?

1. Yes, because it meets the size requirements

2. No, because its gross sales are too high

3. Yes, because it has low risk

4. No, because it is a franchised business

The correct answer is: No, because its gross sales are too high

A businessowners policy (BOP) is designed for small to medium-sized businesses that meet specific criteria, including size, type of business, and risk profile. To be eligible for a BOP, a business typically should have certain limitations on gross sales and square footage. The reasoning behind the correct answer highlights that one of the fundamental eligibility requirements for a BOP is the gross sales limit. Many insurance providers have defined ranges for the amount of sales a business can generate while still qualifying for this type of policy. If Naples Pizza's gross sales exceed those limits, it would not be eligible for a BOP because the risk associated with higher gross sales may warrant different types of coverage or greater limits that a standard BOP may not provide. In considering the other options, size, risk level, and franchise status can impact eligibility, but they must be evaluated alongside gross sales. While it is possible for a franchised business to have a low risk profile, franchise status alone does not inherently exclude a business from BOP eligibility if all other criteria are met. Ultimately, it’s the gross sales exceeding the cap that solidifies the unavailability of a BOP for Naples Pizza in this context.