Property insurance is designed to protect against specific risks that can result in financial loss related to physical assets. Theft of business assets is a clear example of a risk covered by property insurance because it directly involves the physical loss of tangible property. When a business experiences theft, it incurs a financial loss due to the removal of its physical assets, which property insurance can mitigate by providing compensation for the stolen items.
In contrast, the other options represent risks that fall outside the typical coverage of property insurance. Loss of income due to market conditions pertains more to business interruption insurance or other forms of liability coverage, rather than directly concerning physical property. General wear and tear of property is regarded as normal depreciation and is not covered by property insurance since it does not represent an insurable risk. Legal costs arising from disputes relate more to liability insurance or specialized coverage, rather than property insurance, as they do not involve a direct loss of physical assets. Therefore, theft of business assets distinctly aligns with the core function of property insurance in protecting against financial losses due to the loss of physical property.