Alberta General Insurance Level 1 Practice Exam

What does fire insurance cover?

1. Only physical damage from flames

2. Losses from fire & lightning and resultant damage from smoke and water

3. Only the loss of items inside the building

4. Flood damage resulting directly from fire extinguishing efforts

The correct answer is: Losses from fire & lightning and resultant damage from smoke and water

Fire insurance, also known as homeowner's insurance, typically covers losses from fire and lightning as well as any resultant damage from smoke and water. This means that in addition to damage caused directly by flames, damage caused by the resulting smoke or water used to extinguish the fire is also covered. Option A is incorrect because fire insurance also covers more than just physical damage. Option C is incorrect because fire insurance typically covers losses of both the physical building and personal belongings. Option D is incorrect because flood damage resulting from fire extinguishing efforts would typically be covered by a separate flood insurance policy, not fire insurance.