Arizona Adjuster Practice Exam

Which of the following would be classified as an insured peril?

1. Theft of property

2. Wear and tear

3. Negligence

4. Intentional damage

The correct answer is: Theft of property

The classification of an insured peril is based on the types of risks that insurance policies are designed to cover. Theft of property is considered an insured peril because it represents a loss that can occur suddenly and is beyond the control of the insured. Insurance policies typically provide coverage for sudden and accidental events, such as theft, making this peril one that is usually included in standard property insurance policies. In contrast, wear and tear refers to the gradual deterioration of property over time due to normal use. This type of damage is generally not covered by insurance because it is expected and not abrupt. Similarly, negligence is a failure to take proper care, which can lead to damage or loss; however, insurance often excludes coverage for losses that occur as a result of negligence because it relates to the actions (or inactions) of the insured. Intentional damage involves a willful decision to damage property, which is also typically excluded from coverage as it does not align with the purpose of an insurance policy, which is to protect against unforeseen events rather than intentional acts. Therefore, the only option that aligns with the standard definitions of insured perils in property insurance policies is theft of property.