Arizona Contractors License Practice Exam

What does general liability insurance typically cover?

1. Only property damage

2. Only personal injury claims

3. A broad range of claims including personal injury and property damage

4. Only employee claims

The correct answer is: A broad range of claims including personal injury and property damage

General liability insurance is designed to provide extensive coverage for a variety of risks that a contractor or business may face while operating. This type of insurance typically covers both personal injury claims, which pertain to bodily harm suffered by third parties due to the insured's operations, and property damage claims, which involve damage to someone else's property resulting from the business's activities. The comprehensive nature of general liability insurance is crucial for businesses, as it protects against legal fees and settlements that can arise from accidents or incidents that occur in the course of business operations. Additionally, it helps to safeguard a contractor's reputation and financial stability by providing a safety net against unexpected claims. While some options suggest that it only covers one aspect, such as property damage or personal injury, general liability insurance encompasses a broader scope of risks. This is why the understanding of this insurance type is vital for contractors, ensuring they are adequately protected in various scenarios including both personal injury and damage to property.