Arkansas Insurance Adjuster Practice Exam

How will Jared's insurer respond when Gary files a claim against Jared's homeowners policy for the damage he caused?

1. Deny the claim as watercraft incidents are not covered

2. Cover the damage under property damage liability

3. Jared must pay out of pocket since it's a watercraft incident

4. Refer Gary to his own insurance for coverage

The correct answer is: Deny the claim as watercraft incidents are not covered

Jared's insurer will most likely deny the claim as watercraft incidents are not covered under most standard homeowners insurance policies. This is because watercraft incidents are considered high-risk and are typically covered under a separate boat or watercraft insurance policy. Option B is incorrect because property damage liability covers damages caused by the policyholder's actions, not the actions of others. Option C is incorrect because Jared is not responsible for Gary's actions and should not have to pay out of pocket. Option D is also incorrect because Gary's own insurance would only cover damages if he has a separate watercraft insurance policy.