CSLB Contractor's Law & Business Practice Exam

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What is the purpose of a builders risk policy?

To cover tools used by employees
To provide liability coverage
To protect against job site hazards
To insure job materials

The correct answer is: To protect against job site hazards

A builder's risk policy is specifically designed to protect against risks associated with construction projects, which includes hazards that may occur on the job site. This type of insurance typically covers losses or damages that can happen during the construction phase, such as theft, vandalism, or damage due to weather events. While it may cover some aspects related to job materials, the primary focus of a builder's risk policy is on the work being done at the job site, therefore encompassing the various hazards associated with it. Other options, like providing liability coverage, cover a different aspect of risk management and do not align with the specific intent of the builder's risk policy. Coverage for tools used by employees or solely insuring job materials are also more specialized and are not the main purpose of this type of insurance.