State Farm Insurance License Questions and Correct Answers
Graded A+ 2025/2026 Update
Abandonment Condition - 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 - A loss that occurs at a specific time and place
Actual Cash Value (ACV) - Today's replacement cost minus depreciation. Depreciation
from wear and tear, or obsolescence.
admitted insurer; authorized insurer - Company that meets a state insurance department's
standards and is allowed to do business in that state.
Adverse Selection - the tendency of insureds with a greater than average chance of loss to
purchase insurance
Annual Transit Policy - Nonfiled commercial inland marine transportation form that insures
a property owner's incoming or outgoing shipments of goods during a year
Appraisal Clause - A survey of property to determine the insurable value of the property or
the value of the loss sustained.
Appraisal Condition - Policy condition that outlines a procedure for when the insured and
insurer disagree on the amount of a loss
Assignment - The legal transfer of one's interest in an insurance policy to another person.
, Aviation Hull Insurance - Provides coverage for physical damage to an aircraft.
Bailee's Customers Policy - 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 - 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 - Condition in insurance policies that specifies that the policy cannot
be transferred to another unless the company consents to the transfer in writing.
Bailee - A person or organization that has temporary possession of someone else's personal
property.
Basic Perils in Homeowners Policy - 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) - D - Declarations
I - Insuring agreement
C - Conditions
E - Exclusions
E - Endorsements
Blanket Insurance - 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 - Commercial property coverage forms that covers
commercial, residential, or farm buildings that are under construction or during remodeling.
Graded A+ 2025/2026 Update
Abandonment Condition - 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 - A loss that occurs at a specific time and place
Actual Cash Value (ACV) - Today's replacement cost minus depreciation. Depreciation
from wear and tear, or obsolescence.
admitted insurer; authorized insurer - Company that meets a state insurance department's
standards and is allowed to do business in that state.
Adverse Selection - the tendency of insureds with a greater than average chance of loss to
purchase insurance
Annual Transit Policy - Nonfiled commercial inland marine transportation form that insures
a property owner's incoming or outgoing shipments of goods during a year
Appraisal Clause - A survey of property to determine the insurable value of the property or
the value of the loss sustained.
Appraisal Condition - Policy condition that outlines a procedure for when the insured and
insurer disagree on the amount of a loss
Assignment - The legal transfer of one's interest in an insurance policy to another person.
, Aviation Hull Insurance - Provides coverage for physical damage to an aircraft.
Bailee's Customers Policy - 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 - 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 - Condition in insurance policies that specifies that the policy cannot
be transferred to another unless the company consents to the transfer in writing.
Bailee - A person or organization that has temporary possession of someone else's personal
property.
Basic Perils in Homeowners Policy - 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) - D - Declarations
I - Insuring agreement
C - Conditions
E - Exclusions
E - Endorsements
Blanket Insurance - 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 - Commercial property coverage forms that covers
commercial, residential, or farm buildings that are under construction or during remodeling.
