Georgia Property & Casualty Practice Exam

Which type of property insurance covers losses caused by acts of nature such as earthquakes or floods?

1. Homeowners insurance

2. Flood insurance

3. Comprehensive coverage

4. Liability insurance

The correct answer is: Flood insurance

Flood insurance specifically covers losses resulting from flooding, which is often classified as a natural disaster. This type of insurance is essential because standard homeowners insurance policies typically do not cover flood damage. Flooding can occur due to heavy rains, storm surges, or rising bodies of water, making flood insurance crucial for property protection in areas susceptible to these natural events. While homeowners insurance provides some coverage for certain perils, it generally does not extend to flooding or earthquakes. Comprehensive coverage is usually associated with auto insurance and refers to damages to your vehicle from non-collision incidents, rather than property insurance. Liability insurance, on the other hand, protects against claims resulting from injuries or damage to others, not from physical damage to your own property caused by natural disasters. Thus, flood insurance is the definitive choice for covering losses specifically due to flooding, a type of natural act.