Louisiana Contractors License Practice Exam

What does property insurance cover for a business?

1. Employee injuries

2. Damage to property, theft, or loss

3. Liability claims against the business

4. Natural disasters only

The correct answer is: Damage to property, theft, or loss

Property insurance is designed to protect a business's physical assets from various forms of damage or loss. This coverage typically includes protection against events such as theft, vandalism, fire, and certain natural disasters affecting the buildings, equipment, inventory, and other tangible assets of the business. By encompassing damage to property and loss due to theft, it provides a financial safety net that allows businesses to recover from incidents that could otherwise threaten their operational stability. The other choices reflect important aspects of business insurance but fall outside the specific scope of property insurance. For instance, employee injuries would generally be covered by workers' compensation insurance rather than property insurance. Liability claims against the business relate to general liability insurance, which protects against claims of negligence. Lastly, while natural disasters can fall under property insurance, it does not mean that this type of insurance exclusively covers such events, which is why stating it covers only natural disasters is inaccurate.