Alabama Insurance Adjuster Practice Exam

Which statement regarding Personal Article Floaters is FALSE?

1. They cover all personal belongings.

2. They are scheduled policies based on the value of items.

3. They are designed for high-value items.

4. They may have specific coverage limits.

The correct answer is: They cover all personal belongings.

Personal Article Floaters (PAFs) are specialized insurance policies that provide coverage for individual high-value items, such as jewelry, fine art, or collectibles. These policies are specifically tailored to insure items that may not be fully covered under a standard homeowner's policy. The statement that claims Personal Article Floaters cover all personal belongings is inaccurate because PAFs do not provide blanket coverage for all items. Instead, they require the policyholder to list the items being insured and their values, meaning that only the explicitly scheduled items receive coverage. This contrasts with a standard homeowners policy, where a wider range of personal property is protected under broader terms. Other statements are accurate: the policies are scheduled based on the value of the items, meaning that the coverage amount corresponds to the listed value of each item; they are specifically designed for high-value possessions that may exceed the limits of standard insurance policies; and they may have specific coverage limits tailored to the individual items and their assessed values.