State Farm Insurance License Exam questions and
answers 2026\2027 A+ Grade
Abandonment Condition
- correct answer A condition often contained in property insurance policies that states that the insured
cannot abandon damaged property to the insurer and demand to be reimbursed for its full value.
Accident
- correct answer A loss that occurs at a specific time and place
Actual Cash Value (ACV)
- correct answer Today's replacement cost minus depreciation. Depreciation from wear and tear, or
obsolescence.
admitted insurer; authorized insurer
- correct answer Company that meets a state insurance department's standards and is allowed to do
business in that state.
Adverse Selection
- correct answer the tendency of insureds with a greater than average chance of loss to purchase
insurance
Annual Transit Policy
- correct answer Nonfiled commercial inland marine transportation form that insures a property owner's
incoming or outgoing shipments of goods during a year
Appraisal Clause
- correct answer A survey of property to determine the insurable value of the property or the value of
the loss sustained.
,Appraisal Condition
- correct answer Policy condition that outlines a procedure for when the insured and insurer disagree on
the amount of a loss
Assignment
- correct answer The legal transfer of one's interest in an insurance policy to another person.
Aviation Hull Insurance
- correct answer Provides coverage for physical damage to an aircraft.
Bailee's Customers Policy
- correct answer Nonfiled commercial inland marine form obtained by a bailee to cover loss or damage
to customers' property in the bailee's custody without regard to liability.
Appurtenant Structures
- correct answer Buildings of lesser value that are on the same premises as the main building insured
under a property policy; they are usually covered by the policy.
Assignment Condition
- correct answer Condition in insurance policies that specifies that the policy cannot be transferred to
another unless the company consents to the transfer in writing.
Bailee
- correct answer A person or organization that has temporary possession of someone else's personal
property.
Basic Perils in Homeowners Policy
- correct answer There are 14 perils. Fire, lightening, riot, explosion, vehicles, volcanic eruption, civil
commotion, smoke, hail, aircraft, windstorm, vandalism, malicious mischief, theft.
Basic Property Policy Structure (DICEE)
- correct answer D - Declarations
I - Insuring agreement
, C - Conditions
E - Exclusions
E - Endorsements
Blanket Insurance
- correct answer Type of insurance policy that covers more than one item of property at a single location
or one or more items of property at multiple locations
Builders Risk Coverage Form
- correct answer Commercial property coverage forms that covers commercial, residential, or farm
buildings that are under construction or during remodeling.
Cargo Insurance
- correct answer Type of ocean marine insurance that covers goods while they are in transit over water.
Binder
- correct answer Oral or written statement that provides immediate insurance protection for a specified
period; designed to provide temporary coverage until a policy is issued or denied.
BOP
- correct answer Package policy designed to provide broad property and liability coverage for small
businesses; eligibility requirements are stricter than the CPP.
Business Income Policy
- correct answer Pays for loss of income that the insured sustains due to a direct physical loss from a
covered peril that forces the insured to suspend operations until the property can be repaired, rebuilt,
or replaced with reasonable speed; available with or without extra expense coverage.
Causes of Loss Form
- correct answer Separate form used with the commercial property coverage part of the commercial
package policy that lists covered perils and exclusions. Several different versions provide increasingly
broader coverage from basic to broad to special.
answers 2026\2027 A+ Grade
Abandonment Condition
- correct answer A condition often contained in property insurance policies that states that the insured
cannot abandon damaged property to the insurer and demand to be reimbursed for its full value.
Accident
- correct answer A loss that occurs at a specific time and place
Actual Cash Value (ACV)
- correct answer Today's replacement cost minus depreciation. Depreciation from wear and tear, or
obsolescence.
admitted insurer; authorized insurer
- correct answer Company that meets a state insurance department's standards and is allowed to do
business in that state.
Adverse Selection
- correct answer the tendency of insureds with a greater than average chance of loss to purchase
insurance
Annual Transit Policy
- correct answer Nonfiled commercial inland marine transportation form that insures a property owner's
incoming or outgoing shipments of goods during a year
Appraisal Clause
- correct answer A survey of property to determine the insurable value of the property or the value of
the loss sustained.
,Appraisal Condition
- correct answer Policy condition that outlines a procedure for when the insured and insurer disagree on
the amount of a loss
Assignment
- correct answer The legal transfer of one's interest in an insurance policy to another person.
Aviation Hull Insurance
- correct answer Provides coverage for physical damage to an aircraft.
Bailee's Customers Policy
- correct answer Nonfiled commercial inland marine form obtained by a bailee to cover loss or damage
to customers' property in the bailee's custody without regard to liability.
Appurtenant Structures
- correct answer Buildings of lesser value that are on the same premises as the main building insured
under a property policy; they are usually covered by the policy.
Assignment Condition
- correct answer Condition in insurance policies that specifies that the policy cannot be transferred to
another unless the company consents to the transfer in writing.
Bailee
- correct answer A person or organization that has temporary possession of someone else's personal
property.
Basic Perils in Homeowners Policy
- correct answer There are 14 perils. Fire, lightening, riot, explosion, vehicles, volcanic eruption, civil
commotion, smoke, hail, aircraft, windstorm, vandalism, malicious mischief, theft.
Basic Property Policy Structure (DICEE)
- correct answer D - Declarations
I - Insuring agreement
, C - Conditions
E - Exclusions
E - Endorsements
Blanket Insurance
- correct answer Type of insurance policy that covers more than one item of property at a single location
or one or more items of property at multiple locations
Builders Risk Coverage Form
- correct answer Commercial property coverage forms that covers commercial, residential, or farm
buildings that are under construction or during remodeling.
Cargo Insurance
- correct answer Type of ocean marine insurance that covers goods while they are in transit over water.
Binder
- correct answer Oral or written statement that provides immediate insurance protection for a specified
period; designed to provide temporary coverage until a policy is issued or denied.
BOP
- correct answer Package policy designed to provide broad property and liability coverage for small
businesses; eligibility requirements are stricter than the CPP.
Business Income Policy
- correct answer Pays for loss of income that the insured sustains due to a direct physical loss from a
covered peril that forces the insured to suspend operations until the property can be repaired, rebuilt,
or replaced with reasonable speed; available with or without extra expense coverage.
Causes of Loss Form
- correct answer Separate form used with the commercial property coverage part of the commercial
package policy that lists covered perils and exclusions. Several different versions provide increasingly
broader coverage from basic to broad to special.
