Property & Casualty Insurance Exam (National Portion)Property InsuranceMedium
Under a standard commercial property policy, which of the following is a common exclusion that requires a separate, specialized policy for coverage?
- AVandalism
- BEarthquake
- CFire
- DWindstorm
Show answer & explanationAnswer & explanation
Correct answer: B. Earthquake
Fire, windstorm, and vandalism are all typically covered perils (either Basic or Broad forms). Earthquake, however, is a major exclusion in standard commercial property policies and requires a separate earthquake policy or endorsement to be covered.
Why the other options are wrong
- A. Vandalism is a covered peril, usually included in Basic and Broad forms.
- C. Fire is a fundamental covered peril in all property policies.
- D. Windstorm is a covered peril, often included in Basic and Broad forms.
Commercial Property Exclusions (Major)
Perils or causes of loss that are specifically excluded from coverage in standard commercial property policies, often requiring separate policies or endorsements for protection.
- Common exclusions: Earth movement (earthquake, landslide), flood, war, nuclear hazard.
- These are typically catastrophic losses.
- Insureds must purchase specialized policies or endorsements for coverage.
Memory trick: Major exclusions are the 'big four horsemen' of disaster that your standard policy won't ride.