In the context of property insurance, which is typically true regarding covered risks?

Coverage limitations do indeed vary by policy type, making this the correct answer. Each type of property insurance policy—whether it’s a homeowner's policy, renter's insurance, or commercial property insurance—has its own set of covered perils and exclusions. For instance, a homeowner’s policy may cover specific risks like fire or theft, while commercial policies can include coverage for business interruption or equipment breakdown, often tailored to the nature of the business.

The nuances in coverage are crucial for policyholders to understand, as it impacts the potential for claims and overall risk management. Certain policies might provide broader protection than others, and understanding these distinctions helps policyholders to choose the best fitting insurance for their needs.

Policies typically do not cover all risks; there are common exclusions included in most standard forms, such as flood or earthquake damage, unless additional endorsements are purchased. While underwriting does require disclosure of material information by applicants, this relates more to assessing risk than to the nature of the coverage limitations. Natural disasters are often excluded or limited by standard policies, thus not all natural disasters can be considered covered risks. Overall, recognizing that coverage varies by policy type is vital for effective risk assessment and management in property insurance.