Arizona Adjuster Practice Exam

All of the following persons are entitled to coverage under a property insurance policy EXCEPT:

1. Mortgagee

2. Loss payee

3. Additional insured

4. Bailee

The correct answer is: Bailee

A bailee is someone who temporarily holds another person's property under a mutual agreement. In general, property insurance policies are designed to cover the property owner and specified parties that have a financial interest in the property. Mortgagees and loss payees have an insurable interest as they are directly involved with the property or its financing, thus they are usually listed on the policy to ensure they are covered in the event of a loss. Additional insureds are also recognized in many policies as they may have coverage based on their contractual relationship. However, bailees do not have ownership of the property nor do they hold a mortgage or financial interest that warrants coverage under a typical property insurance policy. Coverage for bailees typically must be secured through a specific type of policy or endorsement that addresses their unique risk, as they are not automatically included in standard property insurance policies.