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Which of the following is an example of a peril that may be excluded in a homeowners policy?
Fire damage
Flood damage
Theft
Accidental loss
The correct answer is: Flood damage
Flood damage is a common exclusion in many homeowners insurance policies. Homeowners policies often cover certain perils, such as fire and theft, but natural disasters like flooding often require separate coverage or policies. This is primarily due to the high risk and potential cost associated with flood claims, which can be significant, leading insurers to limit their liability in standard policies. In contrast, fire damage, theft, and accidental loss are typically covered under standard homeowners policies, as these are more predictable risks that insurers are willing to include in their basic coverage. This distinction clarifies why flood damage is commonly excluded, whereas the other options usually are not.