State Farm Insurance License Exam – Verified Practice Study Guide
(2026/2027 A+ Edition)
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.
, State Farm Insurance License Exam – Verified Practice Study Guide
(2026/2027 A+ Edition)
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.
(2026/2027 A+ Edition)
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.
, State Farm Insurance License Exam – Verified Practice Study Guide
(2026/2027 A+ Edition)
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.
