Los Angeles Claims Adjuster Property and Causality Practice Exam

Which of the following accurately reflects who is considered as insured in a business owned solely by the insured?

1. The insured and all their business partners

2. The insured's domestic helpers

3. The insured and the insured's spouse

4. The insured's customers actively involved

The correct answer is: The insured and the insured's spouse

In a business owned solely by the insured, the correct identification of insured parties typically includes the insured individual and their spouse. This is because, in many insurance policies concerning sole proprietorships, the spouse may be included as an insured party due to the nature of their shared household and potential involvement in business operations. The rationale for this inclusion often hinges on the concept that spouses may assist or participate informally in the business, thus necessitating coverage to protect both parties from liability or loss. While business partners, domestic helpers, and customers can have certain permissions or liabilities related to the business, they do not fall under the direct definition of "insured" within a sole proprietorship's insurance policy in the same way the insured and their spouse would. Therefore, recognizing the insured and their spouse accurately reflects the parties considered insured in this context.