Alabama Insurance Adjuster Practice Exam

Which of the following is typically excluded from coverage in a property insurance policy?

1. Fire damage

2. Earthquake damage

3. Theft

4. Water damage

The correct answer is: Earthquake damage

Earthquake damage is typically excluded from coverage in a standard property insurance policy. Most homeowners and commercial property policies provide coverage for common perils like fire, theft, and certain types of water damage (such as accidental discharge from plumbing). However, natural disasters like earthquakes often require separate, specialized insurance policies due to the high risk and potential for significant losses involved. It is important for policyholders to understand that while they may have coverage for many types of damage, catastrophic events such as earthquakes are specifically excluded, meaning they would not receive assistance from their standard policy in the event of earthquake-related damage. Therefore, those living in earthquake-prone areas are often advised to seek additional coverage for this specific risk.