Washington State Insurance Practice Exam

What does 'Additional Coverage' provide in insurance?

1. Additional coverage for a specific loss expense at no additional premium

2. Coverage for new property acquisitions

3. Reduction in deductibles for high-value claims

4. Higher limits on existing coverage

The correct answer is: Additional coverage for a specific loss expense at no additional premium

'Additional Coverage' in insurance provides extra coverage for a specific loss expense without requiring an additional premium. This means that in the event of a covered loss, the policyholder will have access to additional funds beyond the standard policy limits, which can be crucial in mitigating unexpected financial burdens. This option stands out as the correct answer because it directly explains the purpose and benefit of having additional coverage in insurance policies. Options B, C, and D are not the correct answers because they do not accurately describe what 'Additional Coverage' provides in insurance. Coverage for new property acquisitions, reduction in deductibles for high-value claims, and higher limits on existing coverage are important features in insurance policies but they do not specifically define 'Additional Coverage' as stated in the question.