Washington 60-Hour Fundamentals Practice Exam 2025 - Free Valuation, Financing, and Lending Practice Questions

Property insurance is designed to offer financial protection against specific risks associated with physical property. This includes coverage for losses or damages resulting from various perils such as natural disasters, fire, theft, and vandalism. It also provides liability protection, helping cover any claims resulting from injuries or damages that occur on the insured property. This comprehensive scope of protection is why the response focused on losses or damages to property due to disasters, theft, or liability claims is the correct choice.

The other options do not align with the primary purpose of property insurance. Market fluctuations relate to changes in asset value, which property insurance does not cover, as it focuses on tangible loss rather than value changes. Tenant eviction, while a concern for property owners, generally falls under landlord-tenant law and is not insured through property insurance. Neighborhood instability, which may affect property value and desirability, is also outside the purview of what property insurance can protect against. Therefore, the most accurate understanding of property insurance is indeed that it protects against losses or damages to property from a variety of specific threats.