Property and Casualty Insurance Practice Exam

What does casualty insurance provide coverage for?

1. Property damage exclusively

2. Liability stemming from negligent acts

3. Health care expenses for injuries

4. Loss of income due to accidents

The correct answer is: Liability stemming from negligent acts

Casualty insurance primarily provides coverage for liability arising from negligent acts, which encompasses various situations where one party may be legally liable for harming another. This includes coverage for bodily injury or property damage claims made against the insured due to their negligent actions. For instance, if an individual inadvertently causes an accident that injures another person or damages their property, casualty insurance helps cover the defense costs and any settlements or judgments arising from that liability. The other options either misinterpret the scope of casualty insurance or refer to insurance types not covered under this category. For example, property damage alone primarily falls under property insurance, while health care expenses for injuries relate more closely to health insurance. Additionally, loss of income due to accidents typically pertains to disability insurance or specific accident policies rather than casualty insurance. Understanding that casualty insurance focuses on liability helps clarify its distinct role in the broader landscape of insurance products.