STATE FARM INSURANCE LICENSE EXAM
QUESTIONS AND ANSWERS 2023-2024
Abandonment Condition (correct answers)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 answers)A loss that occurs at a specific time and place
Actual Cash Value (ACV) (correct answers)Today's replacement cost minus depreciation.
Depreciation from wear and tear, or obsolescence.
admitted insurer; authorized insurer (correct answers)Company that meets a state insurance
department's standards and is allowed to do business in that state.
Adverse Selection (correct answers)the tendency of insureds with a greater than average chance
of loss to purchase insurance
Annual Transit Policy (correct answers)Nonfiled commercial inland marine transportation form
that insures a property owner's incoming or outgoing shipments of goods during a year
Appraisal Clause (correct answers)A survey of property to determine the insurable value of the
property or the value of the loss sustained.
Appraisal Condition (correct answers)Policy condition that outlines a procedure for when the
insured and insurer disagree on the amount of a loss
Assignment (correct answers)The legal transfer of one's interest in an insurance policy to another
person.
Aviation Hull Insurance (correct answers)Provides coverage for physical damage to an aircraft.
Bailee's Customers Policy (correct answers)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 answers)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 answers)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 answers)A person or organization that has temporary possession of someone
else's personal property.
, Basic Perils in Homeowners Policy (correct answers)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 answers)D - Declarations
I - Insuring agreement
C - Conditions
E - Exclusions
E - Endorsements
Blanket Insurance (correct answers)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 answers)Commercial property coverage forms that covers
commercial, residential, or farm buildings that are under construction or during remodeling.
Cargo Insurance (correct answers)Type of ocean marine insurance that covers goods while they
are in transit over water.
Binder (correct answers)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 answers)Package policy designed to provide broad property and liability coverage
for small businesses; eligibility requirements are stricter than the CPP.
Business Income Policy (correct answers)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 answers)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.
Condominium Association Coverage Form (correct answers)Commercial Property coverage
form that covers the buildings in a condominium complex. Does not cover condominium owner's
personal property.
Coverage D on a HO Policy - Loss of Use (correct answers)If property loss makes the residence
premises uninhabitable, the additional living expenses are covered; or if a covered loss to the
insured's property makes a part of the residence premises uninhabitable that is rented to others or
held for rental by the insured, this coverage will pay the fair rental value.
coverages excluded on dwelling policy (correct answers)Theft, vandalism, and malicious
mischief excluded on basic policy. Liability excluded on all policies.
QUESTIONS AND ANSWERS 2023-2024
Abandonment Condition (correct answers)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 answers)A loss that occurs at a specific time and place
Actual Cash Value (ACV) (correct answers)Today's replacement cost minus depreciation.
Depreciation from wear and tear, or obsolescence.
admitted insurer; authorized insurer (correct answers)Company that meets a state insurance
department's standards and is allowed to do business in that state.
Adverse Selection (correct answers)the tendency of insureds with a greater than average chance
of loss to purchase insurance
Annual Transit Policy (correct answers)Nonfiled commercial inland marine transportation form
that insures a property owner's incoming or outgoing shipments of goods during a year
Appraisal Clause (correct answers)A survey of property to determine the insurable value of the
property or the value of the loss sustained.
Appraisal Condition (correct answers)Policy condition that outlines a procedure for when the
insured and insurer disagree on the amount of a loss
Assignment (correct answers)The legal transfer of one's interest in an insurance policy to another
person.
Aviation Hull Insurance (correct answers)Provides coverage for physical damage to an aircraft.
Bailee's Customers Policy (correct answers)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 answers)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 answers)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 answers)A person or organization that has temporary possession of someone
else's personal property.
, Basic Perils in Homeowners Policy (correct answers)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 answers)D - Declarations
I - Insuring agreement
C - Conditions
E - Exclusions
E - Endorsements
Blanket Insurance (correct answers)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 answers)Commercial property coverage forms that covers
commercial, residential, or farm buildings that are under construction or during remodeling.
Cargo Insurance (correct answers)Type of ocean marine insurance that covers goods while they
are in transit over water.
Binder (correct answers)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 answers)Package policy designed to provide broad property and liability coverage
for small businesses; eligibility requirements are stricter than the CPP.
Business Income Policy (correct answers)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 answers)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.
Condominium Association Coverage Form (correct answers)Commercial Property coverage
form that covers the buildings in a condominium complex. Does not cover condominium owner's
personal property.
Coverage D on a HO Policy - Loss of Use (correct answers)If property loss makes the residence
premises uninhabitable, the additional living expenses are covered; or if a covered loss to the
insured's property makes a part of the residence premises uninhabitable that is rented to others or
held for rental by the insured, this coverage will pay the fair rental value.
coverages excluded on dwelling policy (correct answers)Theft, vandalism, and malicious
mischief excluded on basic policy. Liability excluded on all policies.
