Texas Fire Alarm License Practice Test

What kind of insurance must fire alarm firms carry?

1. Workers' compensation insurance

2. General liability insurance with product coverage

3. Health insurance for employees

4. Equipment damage insurance

The correct answer is: General liability insurance with product coverage

Fire alarm firms are required to carry general liability insurance with product coverage to protect against risks associated with their business operations. This type of insurance is essential because it safeguards the company from claims related to bodily injury, property damage, and other liabilities that may arise from their products or services. Given the nature of fire alarm systems, which are critical for safety, having liability insurance ensures that the firm can cover legal costs or damages in the event of a system failure or malfunctions that lead to an incident. While other types of insurance, such as workers' compensation and equipment damage insurance, are important for different aspects of the business, general liability insurance with product coverage specifically addresses the potential risks directly associated with the installation, maintenance, and operation of fire alarm systems, making it particularly significant in this context. Health insurance, while important for employee welfare, does not fall under the required coverage for operational liabilities that fire alarm firms must manage.