State Farm Insurance License Practice Exam

What is freight insurance designed to protect against?

1. Loss of cargo during transport

2. Theft of vehicles involved in shipping

3. Loss of shipping costs

4. Damage caused by flooding

The correct answer is: Loss of shipping costs

Freight insurance is specifically designed to protect against the loss or damage of goods while they are being transported. This includes a variety of situations, such as loss of cargo during transport due to accidents, natural disasters, theft, or other unforeseen occurrences. Therefore, the most appropriate choice is the one that directly addresses the protection of goods in transit, which aligns with the primary purpose of freight insurance. The focus is on ensuring that shipments are covered from the point of origin to the point of destination, safeguarding the interests of the shipper and receiver against potential financial loss associated with the cargo itself. The other options refer to specific scenarios that may not capture the full scope of freight insurance's intent or function. For instance, while theft of vehicles or damage from flooding could be relevant, they do not encapsulate the core protective role of freight insurance, which is fundamentally about the cargo itself during transport.