Hawaii Insurance Adjuster License Practice Exam

What coverage does the earthquake endorsement typically exclude?

1. Fire damage resulting from an earthquake.

2. Flood damage.

3. Wear and tear.

4. Structural collapse.

The correct answer is: Flood damage.

The earthquake endorsement is designed specifically to provide coverage for damages that occur due to earthquakes, which can include various types of property damage. However, one of the key aspects of this endorsement is that it typically excludes coverage for flood damage. This is because flood damage is usually covered under a separate flood insurance policy, and earthquakes themselves do not cause flooding directly. Flood damage often arises from rising waters, whether from excessive rainfall, storm surges, or various other sources. Since this type of risk is distinct from earthquake-related incidents, insurers do not include it in the coverage of earthquake endorsements. The other options may relate to certain aspects of property insurance and damage but are generally not specific exclusions under earthquake endorsements. For example, fire damage resulting from an earthquake may be covered, as it can be a direct result of the earthquake's effects. Similarly, wear and tear is a standard exclusion in many types of property insurance and does not typically pertain specifically to earthquakes, while structural collapse can indeed be a covered peril if it results from the seismic activity. Thus, understanding the nature of what is specifically excluded under an earthquake endorsement helps clarify that flood damage is not included, making it the accurate choice.