Georgia Property & Casualty Practice Exam

What reason is given for Ace Real Estate's ineligibility for a business owners policy for its eight-story building?

1. The building must exceed 100,000 square feet of space.

2. Every floor must be occupied.

3. The building is taller than six stories.

4. There is no approved fire protection system.

The correct answer is: The building is taller than six stories.

The reason Ace Real Estate is ineligible for a business owners policy for its eight-story building is that the building is taller than six stories. In many insurance policies, particularly business owners policies, there are specific underwriting guidelines that dictate the maximum height of buildings that can be insured under such a policy. Buildings exceeding this height limit often face higher risks associated with fire and safety, making them ineligible for the standard coverage provided by a business owners policy. This regulation helps insurance companies manage their risk exposure effectively. In this scenario, while factors such as the number of occupied floors or the presence of fire protection systems are important in assessing risk, they do not specifically determine eligibility based on the height limitation enforced by many insurance providers. Thus, the eight-story height directly influences the policy's applicability, leading to ineligibility for a business owners policy.