Other Than Life (OTL) Practice Exam

What type of insurance form would a garment manufacturer need for adequate protection?

1. Retail store form

2. Mercantile building and contents form

3. Building and contents form

4. Building, stock and equipment form

The correct answer is: Building, stock and equipment form

A garment manufacturer requires a specific type of insurance to adequately cover various aspects of their business operation. The building, stock, and equipment form is designed to provide comprehensive protection that addresses the unique needs of a manufacturing entity. This form covers not only the physical structure of the building where the manufacturing occurs but also the inventory of finished goods (stock) and the machinery or equipment used in the production process. This level of coverage is crucial for a garment manufacturer due to the inherent risks associated with the manufacturing process, including potential damage to physical assets from incidents like fire, theft, or equipment failure. By ensuring that all three components—building, stock, and equipment—are insured, the manufacturer can mitigate financial losses that could significantly impact business operations in the event of a disaster or accident. Other options fail to offer the same level of specificity or coverage relevant to a garment manufacturer. The retail store form, for instance, primarily addresses retail operations rather than manufacturing needs. The mercantile building and contents form is oriented towards businesses that primarily sell goods, not those involved in production. Lastly, the building and contents form would exclude the vital protection for stock and equipment crucial to a manufacturing business. Thus, the building, stock, and equipment form stands out as the