State Farm Fire Independent Policy Exam Questions with Revised
Answers 100% CORRECT
Mike and Jennifer Reed have an HO -3 policy in force with $250 deductible. Lightning struck the
insured's house, damaging the house and the contents. Mike is a policeman and operates a engine repair
shop in a shed on the insured premises. Jennifer is a sales representative and often has samples and
merchandise at the house. The following items were listed on the personal property inventory forms
submitted after the loss.
Cash in Mike's billfold $35.00
Cash in Jennifer's purse $160.00
Change in piggy bank $25.00
Hand tools used in Mike's business $780.00
Jennifer's sales samples $320.00
Mike's police uniform $375.00
4 hunting rifles $1,820.00
3 shotguns $870.00
Use the information listed above to answer the following question. How much of the deductible, if any,
would be absorbed in this loss?
Select the single best answer:
A. $ 0
B. $100
C. $475
D. $250
E. $120
250
Lightning hits a power transformer two streets away from the risk and knocks out the power to the entire
area. The temperature is in the 20's and our insured's home is heated by an electric furnace. The insured
has a HO-3 policy in force. ALE will be payable on this loss.
True or False
False
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,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
B. Detached garage used to operate a lawnmower repair shop
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.
E. ALE payments will not exceed 20% of Coverage A limits.
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.
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, 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.
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
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
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
True
The definition of an insured includes all of the following except:
Select the single best answer:
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Answers 100% CORRECT
Mike and Jennifer Reed have an HO -3 policy in force with $250 deductible. Lightning struck the
insured's house, damaging the house and the contents. Mike is a policeman and operates a engine repair
shop in a shed on the insured premises. Jennifer is a sales representative and often has samples and
merchandise at the house. The following items were listed on the personal property inventory forms
submitted after the loss.
Cash in Mike's billfold $35.00
Cash in Jennifer's purse $160.00
Change in piggy bank $25.00
Hand tools used in Mike's business $780.00
Jennifer's sales samples $320.00
Mike's police uniform $375.00
4 hunting rifles $1,820.00
3 shotguns $870.00
Use the information listed above to answer the following question. How much of the deductible, if any,
would be absorbed in this loss?
Select the single best answer:
A. $ 0
B. $100
C. $475
D. $250
E. $120
250
Lightning hits a power transformer two streets away from the risk and knocks out the power to the entire
area. The temperature is in the 20's and our insured's home is heated by an electric furnace. The insured
has a HO-3 policy in force. ALE will be payable on this loss.
True or False
False
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,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
B. Detached garage used to operate a lawnmower repair shop
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.
E. ALE payments will not exceed 20% of Coverage A limits.
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.
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, 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.
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
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
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
True
The definition of an insured includes all of the following except:
Select the single best answer:
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