Property and Casualty Insurance Practice Exam

Which type of insurance can be added as an endorsement to various property policies to cover earthquake damage?

1. Flood insurance

2. Earthquake insurance

3. Inland marine insurance

4. Homeowner's insurance

The correct answer is: Earthquake insurance

Earthquake insurance is specifically designed to provide coverage for damages resulting from seismic activity. It can be added as an endorsement to existing property policies because standard property insurance policies typically exclude coverage for earthquake-related damages. This endorsement allows policyholders to extend their protection against unique risks associated with earthquakes, ensuring that they can recover from losses that would otherwise not be covered. In contrast, flood insurance is intended to cover damage from flooding, which is a separate peril that is not tied to earthquakes. Inland marine insurance generally covers loss or damage to goods in transit and does not address earthquake-related issues. Homeowner's insurance may cover a range of risks associated with a residence but usually does not provide coverage for earthquake damage unless specifically endorsed with earthquake insurance. Hence, adding earthquake insurance as an endorsement is the appropriate solution for protecting against earthquake damage in property policies.