STATE FARM
Abandonment - Answer- The abdication of insured property into the hands of another, or into the possession of no one in
particular.
Absolute Liability - Answer- A type of liability that occurs due to extremely dangerous operations, such as the use of
explosives or working at extreme heights.
Accident - Answer- An unplanned, unforeseen event which occurs suddenly and at a specific place.
Actual Cash Value (ACV) - Answer- The required amount to pay damages or for property loss, which is calculated based
on the property's current replacement value minus depreciation.
Additional Coverage - Answer- A provision in an insurance policy that allows for more coverage for specific loss expense
without increase in premium.
Additional Insureds - Answer- Individuals or business that are not named as insured on the declaration page, but are
protected by the policy, usually in regard to a specific interest.
Adhesion - Answer- A contract offered on a "take-it-or-leave-it" basis by an insurer, in which the insured's only option is to
accept or reject the contract. Any ambiguities in the contract will be settled in favor of the insured.
Admitted Insurer - Answer- An insurance company authorized and licensed to transact business in a particular state.
Adverse Selection - Answer- The tendency of risks with higher probability of loss to purchase and maintain insurance
more often than the risks who present lower probability.
Agent - Answer- An individual who is licensed to sell, negotiate, or effect insurance contracts on behalf of an insurer.
Aggregate Limit - Answer- The maximum limit of coverage available under a liability policy during a policy year regardless
of the number of claims that may be made or the number of accidents that may occur.
Agreed Value - Answer- A property policy with a provision agreed upon by the insurer and insured as to the amount of
insurance that represents a fair valuation for the property at the time the insurance is written.
,Aleatory - Answer- A contract in which the participating parties agree to exchange unequal amounts. Insurance contracts
are aleatory in that the amount the insured will pay in premiums is unequal to the amount the insurer will pay in the event of
a loss.
Alien Insurer - Answer- An insurance company that is incorporated outside the United States.
Apparent Authority - Answer- The appearance or the assumption of authority based on the actions, words, or deeds of the
principal or because of circumstances the principal created.
Appraisal - Answer- An assessment of property to determine either the correct amount of insurance to be written or the
amount of loss to be paid.
Arbitration - Answer- Method of claim settlement used when the insured and insurer cannot agree upon the amount of the
loss.
Assignment - Answer- The transfer of a legal right or interest in an insurance policy. In property and casualty insurance,
assignments of policies are usually valid only with the prior written consent of the insurer.
Authorized Insurer - Answer- An insurance company that has qualified and received a Certificate of Authority from the
Department of Insurance to transact insurance in the state.
Auto - Answer- A land motor vehicle, trailer, or semi-trailer designed for use on public roads, including attached machinery
or equipment; auto does not include mobile equipment.
Avoidance - Answer- A method of dealing with risk by deliberately keeping away from it (e.g. if a person wanted to avoid
the risk of being killed in an airplane crash, he/she might choose never to fly in a plane).
Bailee - Answer- A person or entity that has possession of personal property entrusted to him/her by the owner. For
example, a television repair person that has possession of a customer's television would be a bailee.
Beneficiary - Answer- The person who receives the proceeds from the insurance policy.
Binder - Answer- A temporary contract that puts an insurance policy into force before the premium has been paid.
, Blanket Bond - Answer- A type of bond that covers losses caused by dishonest employees.
Blanket Insurance - Answer- A single property insurance policy that provides coverage for multiple classes of property at
one location, or provides coverage for one or more classes of property at multiple locations.
Bodily Injury Liability - Answer- Legal liability arising from death or physical trauma to a person as a result of a negligent
or purposeful act and omissions by an insured.
Boycott - Answer- An unfair trade practice in which one person refuses to do business with another until he or she agrees
to certain conditions.
Builder's Risk Coverage Form - Answer- A commercial property form that covers buildings under construction.
Burglarly - Answer- The forced entry into another's premises with felonious intent.
Cancellation - Answer- The termination of an in-force insurance policy by either the insured or the insurer prior to the
expiration date shown in the policy.
Casualty Insurance - Answer- A type of insurance that covers losses caused by injury to persons or damage to the
property of others.
Cease and Desist Order - Answer- A demand of a person to stop committing an action that is in violation of a provision.
Certificate of Authority - Answer- A document that authorizes a company to start conducting business and specifies the
kind(s) of insurance a company can transact. It is illegal for an insurance company to transact insurance without this
certificate.
Certificate of Insurance - Answer- A legal document that indicates that an insurance policy has been issued, and that
states both the amounts and types of insurance provided.
Claim - Answer- A demand made by the insured to cover a loss protected by the insurance policy.
Class Rating - Answer- The practice of computing a price per unit of insurance that applies to all applicants possessing a
given set of characteristics.
Abandonment - Answer- The abdication of insured property into the hands of another, or into the possession of no one in
particular.
Absolute Liability - Answer- A type of liability that occurs due to extremely dangerous operations, such as the use of
explosives or working at extreme heights.
Accident - Answer- An unplanned, unforeseen event which occurs suddenly and at a specific place.
Actual Cash Value (ACV) - Answer- The required amount to pay damages or for property loss, which is calculated based
on the property's current replacement value minus depreciation.
Additional Coverage - Answer- A provision in an insurance policy that allows for more coverage for specific loss expense
without increase in premium.
Additional Insureds - Answer- Individuals or business that are not named as insured on the declaration page, but are
protected by the policy, usually in regard to a specific interest.
Adhesion - Answer- A contract offered on a "take-it-or-leave-it" basis by an insurer, in which the insured's only option is to
accept or reject the contract. Any ambiguities in the contract will be settled in favor of the insured.
Admitted Insurer - Answer- An insurance company authorized and licensed to transact business in a particular state.
Adverse Selection - Answer- The tendency of risks with higher probability of loss to purchase and maintain insurance
more often than the risks who present lower probability.
Agent - Answer- An individual who is licensed to sell, negotiate, or effect insurance contracts on behalf of an insurer.
Aggregate Limit - Answer- The maximum limit of coverage available under a liability policy during a policy year regardless
of the number of claims that may be made or the number of accidents that may occur.
Agreed Value - Answer- A property policy with a provision agreed upon by the insurer and insured as to the amount of
insurance that represents a fair valuation for the property at the time the insurance is written.
,Aleatory - Answer- A contract in which the participating parties agree to exchange unequal amounts. Insurance contracts
are aleatory in that the amount the insured will pay in premiums is unequal to the amount the insurer will pay in the event of
a loss.
Alien Insurer - Answer- An insurance company that is incorporated outside the United States.
Apparent Authority - Answer- The appearance or the assumption of authority based on the actions, words, or deeds of the
principal or because of circumstances the principal created.
Appraisal - Answer- An assessment of property to determine either the correct amount of insurance to be written or the
amount of loss to be paid.
Arbitration - Answer- Method of claim settlement used when the insured and insurer cannot agree upon the amount of the
loss.
Assignment - Answer- The transfer of a legal right or interest in an insurance policy. In property and casualty insurance,
assignments of policies are usually valid only with the prior written consent of the insurer.
Authorized Insurer - Answer- An insurance company that has qualified and received a Certificate of Authority from the
Department of Insurance to transact insurance in the state.
Auto - Answer- A land motor vehicle, trailer, or semi-trailer designed for use on public roads, including attached machinery
or equipment; auto does not include mobile equipment.
Avoidance - Answer- A method of dealing with risk by deliberately keeping away from it (e.g. if a person wanted to avoid
the risk of being killed in an airplane crash, he/she might choose never to fly in a plane).
Bailee - Answer- A person or entity that has possession of personal property entrusted to him/her by the owner. For
example, a television repair person that has possession of a customer's television would be a bailee.
Beneficiary - Answer- The person who receives the proceeds from the insurance policy.
Binder - Answer- A temporary contract that puts an insurance policy into force before the premium has been paid.
, Blanket Bond - Answer- A type of bond that covers losses caused by dishonest employees.
Blanket Insurance - Answer- A single property insurance policy that provides coverage for multiple classes of property at
one location, or provides coverage for one or more classes of property at multiple locations.
Bodily Injury Liability - Answer- Legal liability arising from death or physical trauma to a person as a result of a negligent
or purposeful act and omissions by an insured.
Boycott - Answer- An unfair trade practice in which one person refuses to do business with another until he or she agrees
to certain conditions.
Builder's Risk Coverage Form - Answer- A commercial property form that covers buildings under construction.
Burglarly - Answer- The forced entry into another's premises with felonious intent.
Cancellation - Answer- The termination of an in-force insurance policy by either the insured or the insurer prior to the
expiration date shown in the policy.
Casualty Insurance - Answer- A type of insurance that covers losses caused by injury to persons or damage to the
property of others.
Cease and Desist Order - Answer- A demand of a person to stop committing an action that is in violation of a provision.
Certificate of Authority - Answer- A document that authorizes a company to start conducting business and specifies the
kind(s) of insurance a company can transact. It is illegal for an insurance company to transact insurance without this
certificate.
Certificate of Insurance - Answer- A legal document that indicates that an insurance policy has been issued, and that
states both the amounts and types of insurance provided.
Claim - Answer- A demand made by the insured to cover a loss protected by the insurance policy.
Class Rating - Answer- The practice of computing a price per unit of insurance that applies to all applicants possessing a
given set of characteristics.
