STATE FARM LICENSE ACTUAL EXAM
SCRIPT 2026 QUESTIONS AND SOLUTIONS
GRADED A+
◉ INSURANCE
Answer: TRANSFER OF RISK FROM THE INSURED TO THE INSURER
◉ PURE RISK
Answer: NO CHANCE OF GAIN; INSURABLE
◉ SPECULATIVE RISK
Answer: A CHANCE OF LOSS OR GAIN; NOT INSURABLE
◉ HAZARD
Answer: SOMETHING THAT INCREASES THE RISK
◉ PRINCIPLE OF INDEMNITY
Answer: STATES THAT THE PURPOSE OF THE POLICY IS TO
RESTORE THE INSURED FINANCIALLY TO WHERE THEY WERE
PRIOR TO THE LOSS
, ◉ INSURABLE INTEREST
Answer: MUST EXIST ON A CAUALTY POLICY AT TIME OF LOSS IN
ORDER FOR THE POLICY TO PROVIDE COVERAGE
◉ LAW OF LARGE NUMBERS
Answer: USED TO PREDICT THE LIKELIHOOD OF LOSS
◉ ACTUAL CASH VALUE (ACV)
Answer: REPLACEMENT COST MINUS DEPRECIATION
◉ NEGLIGENCE
Answer: TORT, OR A CIVIL WRONG;
GROUNDS FOR A LAWSUIT;
THE FAILURE TO ACT AS A REASONABLE PERSON WOULD IN THE
SAME CIRCUMSTANCES
◉ OCCURENCE
Answer: HAPPENS OVER A PERIOD OF TIME
◉ BINDER
Answer: MAY BE ORAL OR WRITTEN;
SCRIPT 2026 QUESTIONS AND SOLUTIONS
GRADED A+
◉ INSURANCE
Answer: TRANSFER OF RISK FROM THE INSURED TO THE INSURER
◉ PURE RISK
Answer: NO CHANCE OF GAIN; INSURABLE
◉ SPECULATIVE RISK
Answer: A CHANCE OF LOSS OR GAIN; NOT INSURABLE
◉ HAZARD
Answer: SOMETHING THAT INCREASES THE RISK
◉ PRINCIPLE OF INDEMNITY
Answer: STATES THAT THE PURPOSE OF THE POLICY IS TO
RESTORE THE INSURED FINANCIALLY TO WHERE THEY WERE
PRIOR TO THE LOSS
, ◉ INSURABLE INTEREST
Answer: MUST EXIST ON A CAUALTY POLICY AT TIME OF LOSS IN
ORDER FOR THE POLICY TO PROVIDE COVERAGE
◉ LAW OF LARGE NUMBERS
Answer: USED TO PREDICT THE LIKELIHOOD OF LOSS
◉ ACTUAL CASH VALUE (ACV)
Answer: REPLACEMENT COST MINUS DEPRECIATION
◉ NEGLIGENCE
Answer: TORT, OR A CIVIL WRONG;
GROUNDS FOR A LAWSUIT;
THE FAILURE TO ACT AS A REASONABLE PERSON WOULD IN THE
SAME CIRCUMSTANCES
◉ OCCURENCE
Answer: HAPPENS OVER A PERIOD OF TIME
◉ BINDER
Answer: MAY BE ORAL OR WRITTEN;
