State Farm Fire Independent Policy Exam
Questions with Solution
1. 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.
2. 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
3. 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.
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.
4. 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
5. 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
, 6. 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
7. The definition of an insured includes all of the following except: Select
the single best answer:
A. Person(s) listed on the Declaration Page
B. Spouse, if a resident of the household
C. Relatives, if residents of the household
D. Any person under the age of 21 in the care of the named insured, resident spouse,
or a resident relative
E. Spouse: Spouse
8. Joe Smith has a HO-3 policy. He is a carpenter and has collected 100 2"X4" studs
and 30 2"X6" rafters from various job sites. Joe has no specific plans to use the
lumber. The lumber is covered under Coverage A.
True or False: False
9. Under an HO-3 policy, which of the following would be a Coverage B item?
Select the single best answer:
A. Satellite dish bolted to the eave of the house
B. Free standing gas range
Questions with Solution
1. 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.
2. 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
3. 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.
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.
4. 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
5. 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
, 6. 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
7. The definition of an insured includes all of the following except: Select
the single best answer:
A. Person(s) listed on the Declaration Page
B. Spouse, if a resident of the household
C. Relatives, if residents of the household
D. Any person under the age of 21 in the care of the named insured, resident spouse,
or a resident relative
E. Spouse: Spouse
8. Joe Smith has a HO-3 policy. He is a carpenter and has collected 100 2"X4" studs
and 30 2"X6" rafters from various job sites. Joe has no specific plans to use the
lumber. The lumber is covered under Coverage A.
True or False: False
9. Under an HO-3 policy, which of the following would be a Coverage B item?
Select the single best answer:
A. Satellite dish bolted to the eave of the house
B. Free standing gas range
