Louisiana Contractors License Practice Exam

Which type of insurance is essential for a business dealing with high-value assets?

1. Health insurance

2. Property Insurance

3. General liability insurance

4. Workers' compensation insurance

The correct answer is: Property Insurance

Property insurance is crucial for a business that deals with high-value assets because it specifically covers the physical assets owned by the business against various risks, such as fire, theft, vandalism, and certain natural disasters. By protecting these valuable assets, property insurance helps to mitigate financial losses that could arise from damage or loss, ensuring that the business can continue its operations without a significant financial burden. In contrast, health insurance primarily provides coverage for medical expenses incurred by employees, which, while important, does not protect the business’s tangible assets. General liability insurance covers legal liabilities that may arise from accidents, injuries, or claims of negligence, but it does not offer direct protection for property. Workers' compensation insurance is designed to cover employee injuries or illnesses that occur in the course of employment, again not providing coverage for the business's physical assets. Therefore, property insurance stands out as the necessary form of coverage for businesses managing high-value inventories or facilities.