Mortgage Loan Originator (MLO) Licensing Practice Test

What is a benefit of a "blanket" insurance policy for condominium associations?

1. It covers only individual units

2. It simplifies policy management

3. It is cheaper than multiple policies

4. It provides additional coverage for owners

The correct answer is: It simplifies policy management

A blanket insurance policy offers several advantages specifically suited for condominium associations. One of the key benefits is that it simplifies policy management. By bundling coverage for the entire condominium complex into a single policy, the association can streamline administrative tasks, such as premium payments and policy renewals. This centralized approach reduces potential confusion or gaps in coverage that might occur if each unit were to be insured under separate policies. Moreover, having one comprehensive policy means that there is a consistent level of coverage across all units and common areas, which can enhance the association’s ability to manage risk effectively and respond to any claims that may arise. This holistic approach not only aids in maintaining continuity but also facilitates better communication among homeowners regarding their insurance coverage, as everyone is governed under the same policy. While other options, such as lower costs or additional coverage for owners, can be considered potential advantages of blanket policies in certain contexts, the most significant and immediate benefit lies in the organizational simplicity and efficiency that comes from managing a single insurance policy for the entire association.