Arkansas Insurance Adjuster Practice Exam

Which of the following is NOT a feature of a typical Business Owners Policy?

1. Built-in inflation protection

2. Extra Expense coverage

3. Liability protection for lawsuits from accidents or products

4. Usually Actual Cost Valuation

The correct answer is: Usually Actual Cost Valuation

A typical Business Owners Policy usually does not include Actual Cost Valuation. This is because Actual Cost Valuation only reimburses the cost of replacing damaged property minus any depreciation. This means the policyholder would only receive a partial reimbursement, as the value of the damaged property has decreased over time. Instead, most Business Owners Policies use Replacement Cost Valuation, which fully covers the cost of replacing damaged property without taking depreciation into account. Option A is incorrect because Built-in inflation protection refers to coverage that automatically adjusts to compensate for rises in prices over time. Option B is incorrect because Extra Expense coverage provides reimbursement for the cost of temporarily relocating a business after a covered event. Option C is incorrect because Liability protection for lawsuits from accidents or products is a common feature in Business Owners Policies, as it helps protect business owners against legal claims and expenses related to accidents or faulty products.