State Farm Insurance License Practice Exam

What does an Annual Transit Policy cover?

1. Insurance for all property owned by the insured

2. Coverage for incoming or outgoing shipments of goods during a year

3. Long-term coverage for all types of transportation

4. Only damage to vehicles used in transit

The correct answer is: Coverage for incoming or outgoing shipments of goods during a year

An Annual Transit Policy provides coverage specifically designed for the goods being transported, whether they are incoming or outgoing shipments, throughout the year. This type of policy is valuable for businesses that regularly engage in the shipping of products or materials, allowing them to secure coverage under a single annual plan rather than needing to procure separate insurance for each shipment. It typically includes coverage for various risks like loss or damage to the insured goods while they are in transit, which can happen due to numerous factors such as theft, accidents, or adverse weather conditions. The focus of the Annual Transit Policy is on the actual goods being transported, rather than general property owned by the insured or the vehicles used. This specialized coverage caters to the unique needs of businesses involved in the shipment of products and helps ensure that their financial interests are protected throughout the shipping process.