Which of the following is an example of a physical encumbrance on property?

A physical encumbrance on property specifically pertains to restrictions or limitations that affect the property itself, and these often relate to the physical use of the property. An easement is a right to cross or otherwise use someone else's land for a specified purpose, which directly impacts how the property can be utilized. For example, a utility company might have an easement allowing them to install power lines across a property, thereby physically encumbering the property owner's ability to use that space as they wish.

A lien, while typically a financial obligation associated with the property, can also be considered a claim against the property that may prevent the owner from selling or transferring the title until the debt is settled. Both easements and liens involve physical implications on how the property can be used or transferred.

In contrast, an insurance policy relates to financial protection against specific risks and does not impose any physical restrictions on the property. A mortgage agreement, while a significant financial aspect of property ownership, does not physically encumber the property either. Lastly, a verbal agreement to buy does not have a legal standing that would affect the physical use of the property until a formal contract is executed. Thus, easements and liens are clear examples of physical encumbrances, making that choice correct.