State Farm Fire Independent Policy Exam 2025 update
with verified and complete solution
Select the false statement listed below: In the HO-3 policy, the ALE payments will be made only for:
Select the single best answer:
A. The shortest time necessary to repair or replace the damaged property, but not to exceed 24
months.
B. If the insured does not rebuild, the time necessary for the insured to relocate in permanent living
quarters, but not to exceed 24 months.
C. ALE payments can run beyond the expiration of the policy.
D. ALE payments are limited to incurred costs for the shortest of three time frames as dictated by the
policy.
E. ALE payments will not exceed 20% of Coverage A limits. - ANSWER-E. ALE payments will not exceed
20% of Coverage A limits.
The insured has a HO-3 policy in force. All of the losses are covered except:
Select the single best answer:
A. Shed rented to a tenant, to store furniture
B. Detached garage used to operate a lawnmower repair shop
C. Garage rented to the neighbor to store an antique automobile
D. Basement used as an office for insured's bookkeeping business
E. Garage (attached) rented to tenant to store fishing boat - ANSWER-B. Detached garage used to
operate a lawnmower repair shop
Jennifer Marco has a HO-3 policy, with a Coverage B limit of $75,000, a $500 deductible, and no
Option AI, ID, FA or JF. Which of the following statements is true concerning her personal property?
Select the single best answer:
A. Coverage for personal property applies for perils listed under Section I - Losses Insured, Coverage B
- Personal Property and Section I - Additional Coverages.
B. Coverage B applies only for items Jennifer owns, while anywhere in the world.
C. The limit of liability for theft loss to jewelry and furs is $1000 or 10% of the Coverage B limit,
whichever is greater.
D. The limit of liability for tornado losses to firearms is $2,500. - ANSWER-A. Coverage for personal
property applies for perils listed under Section I - Losses Insured, Coverage B - Personal Property and
Section I - Additional Coverages.
Under an HO-3 policy, deductibles apply to which of the following type(s) of losses.
Select the single best answer:
A. Credit Card, Bank Fund Transfer Card, Forgery and Counterfeit Money
B. Fire Department Service Charges
C. Rekey locks after keys are stolen
D. Debris Removal Charges - ANSWER-B. Fire Department Service Charges
In the HO-3 policy, Coverage C consists of three coverages:
Additional Living Expense
Fair Rental Value
, Property Removed
True or False - ANSWER-False its Additional Living expense, Fair rental value and prohibited use
The steps in applying the deductible on a HO-3 homeowners policy are:
1.)The deductible is first applied to the covered loss.
2.)Any coverage or special limits are then applied to the covered loss.
3.)The amount payable to the insured will be the greater of the amounts arrived at in steps 1 and 2.
True or False - ANSWER-True
The definition of an insured includes all of the following except:
Select the single best answer:
A. Person(s) listed on the Declaration Page
B. Spouse, if a resident of the household
C. Relatives, if residents of the household
D. Any person under the age of 21 in the care of the named insured, resident spouse, or a resident
relative
E. Spouse - ANSWER-Spouse
Joe Smith has a HO-3 policy. He is a carpenter and has collected 100 2"X4" studs and 30 2"X6" rafters
from various job sites. Joe has no specific plans to use the lumber. The lumber is covered under
Coverage A.
True or False - ANSWER-False
Under an HO-3 policy, which of the following would be a Coverage B item?
Select the single best answer:
A. Satellite dish bolted to the eave of the house
B. Free standing gas range
C. Built-in microwave oven
D. Automatic garage door opener
E. Water softener system - ANSWER-Free Standing gas range
Under an HO-3 policy, which of the following would not be a Coverage A item?
Select the single best answer:
A. Automatic lawn sprinkler system
B. Wall to wall carpet attached to the dwelling
C. A new (in the box), built-in microwave oven the insured intends to install in his fishing cabin.
D. A shed, on a foundation, rented to a neighbor to store the neighbor's boat
E. Materials and supplies to build bookshelves in the basement of the residence premises and stored
in the garage - ANSWER-E. Materials and supplies to build bookshelves in the basement of the
residence premises and stored in the garage
An HO-3 homeowners policy with a $250 deductible is in force and the policy limits (Coverage A and
Coverage B) are adequate to cover this damage. During a severe windstorm, rain blows through open
windows and causes the following damage:
Hardwood floor in the dining room $1,700
Water stains on the drywall $ 220
Water stains on the area rug $125
with verified and complete solution
Select the false statement listed below: In the HO-3 policy, the ALE payments will be made only for:
Select the single best answer:
A. The shortest time necessary to repair or replace the damaged property, but not to exceed 24
months.
B. If the insured does not rebuild, the time necessary for the insured to relocate in permanent living
quarters, but not to exceed 24 months.
C. ALE payments can run beyond the expiration of the policy.
D. ALE payments are limited to incurred costs for the shortest of three time frames as dictated by the
policy.
E. ALE payments will not exceed 20% of Coverage A limits. - ANSWER-E. ALE payments will not exceed
20% of Coverage A limits.
The insured has a HO-3 policy in force. All of the losses are covered except:
Select the single best answer:
A. Shed rented to a tenant, to store furniture
B. Detached garage used to operate a lawnmower repair shop
C. Garage rented to the neighbor to store an antique automobile
D. Basement used as an office for insured's bookkeeping business
E. Garage (attached) rented to tenant to store fishing boat - ANSWER-B. Detached garage used to
operate a lawnmower repair shop
Jennifer Marco has a HO-3 policy, with a Coverage B limit of $75,000, a $500 deductible, and no
Option AI, ID, FA or JF. Which of the following statements is true concerning her personal property?
Select the single best answer:
A. Coverage for personal property applies for perils listed under Section I - Losses Insured, Coverage B
- Personal Property and Section I - Additional Coverages.
B. Coverage B applies only for items Jennifer owns, while anywhere in the world.
C. The limit of liability for theft loss to jewelry and furs is $1000 or 10% of the Coverage B limit,
whichever is greater.
D. The limit of liability for tornado losses to firearms is $2,500. - ANSWER-A. Coverage for personal
property applies for perils listed under Section I - Losses Insured, Coverage B - Personal Property and
Section I - Additional Coverages.
Under an HO-3 policy, deductibles apply to which of the following type(s) of losses.
Select the single best answer:
A. Credit Card, Bank Fund Transfer Card, Forgery and Counterfeit Money
B. Fire Department Service Charges
C. Rekey locks after keys are stolen
D. Debris Removal Charges - ANSWER-B. Fire Department Service Charges
In the HO-3 policy, Coverage C consists of three coverages:
Additional Living Expense
Fair Rental Value
, Property Removed
True or False - ANSWER-False its Additional Living expense, Fair rental value and prohibited use
The steps in applying the deductible on a HO-3 homeowners policy are:
1.)The deductible is first applied to the covered loss.
2.)Any coverage or special limits are then applied to the covered loss.
3.)The amount payable to the insured will be the greater of the amounts arrived at in steps 1 and 2.
True or False - ANSWER-True
The definition of an insured includes all of the following except:
Select the single best answer:
A. Person(s) listed on the Declaration Page
B. Spouse, if a resident of the household
C. Relatives, if residents of the household
D. Any person under the age of 21 in the care of the named insured, resident spouse, or a resident
relative
E. Spouse - ANSWER-Spouse
Joe Smith has a HO-3 policy. He is a carpenter and has collected 100 2"X4" studs and 30 2"X6" rafters
from various job sites. Joe has no specific plans to use the lumber. The lumber is covered under
Coverage A.
True or False - ANSWER-False
Under an HO-3 policy, which of the following would be a Coverage B item?
Select the single best answer:
A. Satellite dish bolted to the eave of the house
B. Free standing gas range
C. Built-in microwave oven
D. Automatic garage door opener
E. Water softener system - ANSWER-Free Standing gas range
Under an HO-3 policy, which of the following would not be a Coverage A item?
Select the single best answer:
A. Automatic lawn sprinkler system
B. Wall to wall carpet attached to the dwelling
C. A new (in the box), built-in microwave oven the insured intends to install in his fishing cabin.
D. A shed, on a foundation, rented to a neighbor to store the neighbor's boat
E. Materials and supplies to build bookshelves in the basement of the residence premises and stored
in the garage - ANSWER-E. Materials and supplies to build bookshelves in the basement of the
residence premises and stored in the garage
An HO-3 homeowners policy with a $250 deductible is in force and the policy limits (Coverage A and
Coverage B) are adequate to cover this damage. During a severe windstorm, rain blows through open
windows and causes the following damage:
Hardwood floor in the dining room $1,700
Water stains on the drywall $ 220
Water stains on the area rug $125
