Question

James owns a metal machining shop where he does contract work for local mechanics, manufacturing hard-to-find parts or custom fittings. Being a cautious man, James wants commercial property insurance that provides coverage on an open-peril basis. Which Causes of Loss Form would best suit James' needs?

A. Universal Form
B. Special Form
C. Basic Form
D. Broad Form

Answer 1

The Special Form Causes of Loss Form would best suit James' needs for his metal machining shop, providing an open-peril basis coverage (B).

Step-by-step explanation:

James, who owns a metal machining shop and is looking for a comprehensive insurance policy, would be best served by the Special Form Causes of Loss Form. The Special Form offers coverage on an open-peril basis, meaning it provides coverage for all perils except those explicitly excluded in the policy.

This is ideal for business owners like James who want to ensure they have far-reaching protection, especially since his work involves manufacturing custom parts where any number of unforeseen events could occur. On the contrary, the Basic and Broad Forms only cover named perils, which are specifically listed events, whereas the Universal Form is not a commonly used term in commercial property insurance.