State Farm Actual Exam Revision Questions and Correct Answers
Graded A+ 2025/2026 Update
To whom may a certificate of authority be issued - To an insurer authorized to transact
business in this state
Two individuals who are in the same risk and age class are charged different rates -
discrimination
Controlled Business - Insurance on the producer's own life property, or the lives or property
of the producer's family or business associates
Insurers are classified according to their domicile. What are the three types of insurers? -
Domestic, foreign, alien
Who is responsible for the costs associated with the examination of insurers? - The insurer
who is being examined
Who may share in the commission from the sale of an insurance policy - Only producers
properly licensed for the type of insurance transaction
If an insurer meets the state's financial requirements and is approved to transact business in the
state, it is considered what type of insurer - Authorized/admitted
What are the producers required to do in order to renew their license - Complete continuing
education hours and pay a renewal fee
What type of licensee represents the insurance company? - The agent
,On its advertisement, a company claims that is has funds in its possession that are, in fact, not
available for the payment of losses or claims. What is the company guilty of? -
Misrepresentation
When can the Commissioner or Director examine insurers? - Whenever deemed necessary
but at least once every few years
The requirement that agents must account for and promptly remit all insurance funds collected is
known as what type of agent responsibility - Fiduciary
If an insurer holds a Certificate of Authority, it is known as what type of insurer -
Authorized/ admitted
If a producer makes maliciously critical statements about another insurer, what is this illegal
practice called - Defamation
Who owns stock companies? - stockholders
Who must be notified of a producer's change of address? - The department of insurance
(Commissioner/director/superintendent)
What are the most common penalties for violation of insurance statutes - A cease and desist
order, a fine, and license suspension or revocation
When would a misrepresentation of an insurance application be considered fraud - When it
is intentional and material
What is the purpose of a cease and desist order - to prevent a producer or insurer from
further violating laws for transacting insurance
, A state-issued document empowering an insurance company to become an admitted insurer is
called what - Certificate of Authority
An agent offers a client free tickets to a sporting event in exchange for purchase of an insurance
policy. What is the agent guilty of? - Rebating
Who is an insurance agent? - A person authorized to sell, solicit, and negotiate insurance
contracts
What document is required for an insurance company to transact insurance - Certificate of
Authority
What illegal act does a producer commit when the producer represents a policy in a more favorable
light than the policy really is - Misrepresentation
In general, who can be excluded from producer licensing and examination requirements -
Insurance company officers, directors, or any other employees who do not transact
insurance and who do not receive commissions for their services (usually their responsibilities
include administrative, executive or clerical.)
Which types of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse,
or switch policies from one another - Twisting
Who is considered a nonresident agent - an agent who resides an is licensed in another state,
but who is authorized to transact insurance in this state
What type of insurer is formed under the laws of another state - Foreign
If the Commissioner/Superintendent finds a licensee engaging in an unfair method of competition
or unfair practice, what order will be issued - Cease and desist order
Graded A+ 2025/2026 Update
To whom may a certificate of authority be issued - To an insurer authorized to transact
business in this state
Two individuals who are in the same risk and age class are charged different rates -
discrimination
Controlled Business - Insurance on the producer's own life property, or the lives or property
of the producer's family or business associates
Insurers are classified according to their domicile. What are the three types of insurers? -
Domestic, foreign, alien
Who is responsible for the costs associated with the examination of insurers? - The insurer
who is being examined
Who may share in the commission from the sale of an insurance policy - Only producers
properly licensed for the type of insurance transaction
If an insurer meets the state's financial requirements and is approved to transact business in the
state, it is considered what type of insurer - Authorized/admitted
What are the producers required to do in order to renew their license - Complete continuing
education hours and pay a renewal fee
What type of licensee represents the insurance company? - The agent
,On its advertisement, a company claims that is has funds in its possession that are, in fact, not
available for the payment of losses or claims. What is the company guilty of? -
Misrepresentation
When can the Commissioner or Director examine insurers? - Whenever deemed necessary
but at least once every few years
The requirement that agents must account for and promptly remit all insurance funds collected is
known as what type of agent responsibility - Fiduciary
If an insurer holds a Certificate of Authority, it is known as what type of insurer -
Authorized/ admitted
If a producer makes maliciously critical statements about another insurer, what is this illegal
practice called - Defamation
Who owns stock companies? - stockholders
Who must be notified of a producer's change of address? - The department of insurance
(Commissioner/director/superintendent)
What are the most common penalties for violation of insurance statutes - A cease and desist
order, a fine, and license suspension or revocation
When would a misrepresentation of an insurance application be considered fraud - When it
is intentional and material
What is the purpose of a cease and desist order - to prevent a producer or insurer from
further violating laws for transacting insurance
, A state-issued document empowering an insurance company to become an admitted insurer is
called what - Certificate of Authority
An agent offers a client free tickets to a sporting event in exchange for purchase of an insurance
policy. What is the agent guilty of? - Rebating
Who is an insurance agent? - A person authorized to sell, solicit, and negotiate insurance
contracts
What document is required for an insurance company to transact insurance - Certificate of
Authority
What illegal act does a producer commit when the producer represents a policy in a more favorable
light than the policy really is - Misrepresentation
In general, who can be excluded from producer licensing and examination requirements -
Insurance company officers, directors, or any other employees who do not transact
insurance and who do not receive commissions for their services (usually their responsibilities
include administrative, executive or clerical.)
Which types of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse,
or switch policies from one another - Twisting
Who is considered a nonresident agent - an agent who resides an is licensed in another state,
but who is authorized to transact insurance in this state
What type of insurer is formed under the laws of another state - Foreign
If the Commissioner/Superintendent finds a licensee engaging in an unfair method of competition
or unfair practice, what order will be issued - Cease and desist order
