California Commercial Insurance Practice Exam

The Personal Effects and Property of Others coverage extension is designed specifically to protect personal belongings and certain items that are not owned by the insured but are in their possession or custody. This coverage typically includes the insured's personal effects, such as clothing, jewelry, and other personal items, as well as property belonging to others that the insured has taken care of, stored, or is responsible for as part of their business operations.

This coverage is crucial for businesses, as it ensures that items owned by clients, customers, or other third parties are safeguarded against risks such as theft, damage, or loss while they are in the possession of the insured. This is particularly important in industries such as retail, repair, or service-based businesses where the insured frequently handles the personal property of customers.

The other options either limit the coverage to only tools or items owned solely by the insured or focus on property used in business, which doesn't encompass the broader protective scope that the correct answer provides. The focus here is on covering personal effects and property that may belong to others, which aligns with the intent of the coverage extension.