State Farm Insurance License Exam
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.
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.
