State Farm Insurance License Practice Exam

What type of insurance is blanket insurance?

1. Covers a single item at multiple locations

2. Covers multiple items at a single location

3. Covers high-value items only

4. Covers items only in transit

The correct answer is: Covers multiple items at a single location

Blanket insurance is designed to provide coverage for multiple items at a single location or across various locations under a single limit of insurance. This type of policy simplifies the management of insurance for property owners or businesses that have many items or assets, as they do not have to insure each item separately. It allows for flexibility when it comes to loss and damage claims because it can cover various types of property without needing individual appraisals for each item. This coverage is particularly beneficial for businesses that manage a large inventory or operate across multiple sites, as it protects against the risk of loss without the constraints of item-specific policies. The other options define scenarios that are not characteristic of blanket insurance. For instance, covering a single item at multiple locations implies a different type of insurance that focuses on a specific item rather than a holistic approach. Coverage that is limited to high-value items or items exclusively during transit also does not accurately depict the broader protection that blanket insurance offers.