State Farm Insurance License Exam Questions and Answers

State Farm Insurance License Exam Questions and Answers Abandonment Condition - 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 - Answer- A loss that occurs at a specific time and place Actual Cash Value (ACV) - Answer- Today's replacement cost minus depreciation. Depreciation from wear and tear, or obsolescence. admitted insurer; authorized insurer - Answer- Company that meets a state insurance department's standards and is allowed to do business in that state. Adverse Selection - Answer- the tendency of insureds with a greater than average chance of loss to purchase insurance Annual Transit Policy - Answer- Nonfiled commercial inland marine transportation form that insures a property owner's incoming or outgoing shipments of goods during a year Appraisal Clause - Answer- A survey of property to determine the insurable value of the property or the value of the loss sustained. Appraisal Condition - Answer- Policy condition that outlines a procedure for when the insured and insurer disagree on the amount of a loss Assignment - Answer- The legal transfer of one's interest in an insurance policy to another person. Aviation Hull Insurance - Answer- Provides coverage for physical damage to an aircraft. Bailee's Customers Policy - 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 - 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 - 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 - Answer- A person or organization that has temporary possession of someone else's personal property. Basic Perils in Homeowners Policy - 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) - Answer- D - Declarations I - Insuring agreement C - Conditions E - Exclusions E - Endorsements Blanket Insurance - 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 - Answer- Commercial property coverage forms that covers commercial, residential, or farm buildings that are under construction or during remodeling. Cargo Insurance - Answer- Type of ocean marine insurance that covers goods while they are in transit over water. Binder - 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 - Answer- Package policy designed to provide broad property and liability coverage for small businesses; eligibility requirements are stricter than the CPP. Business Income Policy - 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 suspe