Question

John Davis is the CEO of Masterminds Inc. He operates four separate restaurants, each with its own style and menu (i.e. American, Oriental, Mexican and Caribbean) and name. John decides to add a new restaurant that serves a menu from Eastern India and purchases the perfect building. Two weeks later, and before he has an opportunity to contact his insurance agent, a fire breaks out next door and spreads to his building. Before the fire is extinguished more than half of it is destroyed. John reports the claim and it is assigned to you. You make contact with John, at which time he asks if the new location will be covered under the Masterminds policy.

The initial step in your investigation is to review the Masterminds policy. It is a Commercial Property policy with $300,000 in dwelling coverage on each of its four locations, a special "All Risks" coverage form and a $1,000 deductible. How would you respond to John?

(A) The commercial Building and Personal Property form provides coverage for newly acquired locations for 30 days for up to $250,000 on the dwelling and $100,000 on the business personal property. Thus, the new location is covered.

(B) The Debris Removal coverage is $10,000

(C) If the fire releases pollutants that require clean up, there is limited coverage of $10,000.

(D) Under the commercial Building and Personal Property coverage form the Fire

Answer 1

John's new restaurant falls within the 30-day window of coverage for newly acquired locations under the Commercial Property policy of Masterminds Inc., hence it is covered for up to $250,000 for the building and $100,000 for business personal property.

Step-by-step explanation:

John, based on the terms of the Commercial Property policy for Masterminds Inc., it appears that the new restaurant would indeed be covered. The policy typically provides coverage for newly acquired locations for a limited period, which in this case is 30 days. This coverage would include up to $250,000 for the building (dwelling) and up to $100,000 for the business personal property. Therefore, since the fire occurred two weeks after the acquisition of the new property, it falls within this 30-day window and the damage to the new location should be covered, subject to the policy's terms and the deductible.