State Farm Insurance License Questions and Answers Updated 2026/2027 Version | Verified Answers

State Farm Insurance License Questions and Answers Updated 2026/2027 Version | Verified Answers 1. Fair Access to Insurance Requirements (FAIR) - ANSWER Program established by law that makes property insurance available to insureds who might otherwise be uninsurable in the standard market. 2. Fiduciary - ANSWER Someone who has undertaken to act for and on behalf of another in a particular matter in circumstance which give rise to a relationship of trust and confidence 3. Flood - ANSWER - an overflow of inland or tidal waves a. usual and rapid accumulation of runoff of surface water from any source, unless general flooding exists b. mudslides caused by accumulations of water on the ground or underground c. collapse of land as a result of excessive erosion due to flood 4. Freight Insurance - ANSWER Type of ocean marine insurance that protects the insured against the loss of shipping costs 5. Farm Policy Coverages - ANSWER Farm property Coverage A - dwelling Coverage B - other structures non-farming Coverage C - household personal property Coverage D - loss of use Farm Property Coverages Coverage E - scheduled farm personal property Coverage F - unscheduled farm personal property Coverage G - barns, outbuildings, other farm structures Farm Liability Coverages Coverage H - BI and PD Coverage I - personal and advertising injury Coverage J - medical payments to others 6. Floater - ANSWER An insurance policy, or an addition to another insurance policy, covering personal property deemed to be easily moveable. It covers property lost, damaged, or destroyed (e.g. jewelry, electronics, and furs.) 7. Fraud - ANSWER A deliberate misrepresentation that causes harm; an all out effort by one party to deceive and cheat the other, must have intent. 8. Functional Replacement Cost - ANSWER Damaged property is repaired or replaced with less expensive, but functionally equivalent, materials 9. HO-3 Policy Perils - ANSWER Dwelling covered for open perils and personal property covered for broad perils in this HO policy. 10. HO-4 Policy - ANSWER Renters policy. Personal property covered for broad perils. 11. Indemnity - ANSWER Restores an insured to the approximate conditions before the loss, no better or worse. 12. Inherent Vice - ANSWER Characteristic in property itself causing it to depreciate, spoil, break, become defective, disintegrate, or destroy itself. 13. Implied Warranties - ANSWER In ocean marine insurance, warranties that are not written into the policy, but have become a part of the policy by custom. 14. Indirect Loss - ANSWER Loss that is the result or consequence of a direct loss 15. Inland Marine Insurance - ANSWER Property insurance coverage designed to insure exposures that cannot be conveniently or reasonably confined to a fixed location or insured under a standard form. Includes coverage for property in transit, overland, moveable property, instruments of transportation and communication (bridges, roads, and television/radio towers), legal liability for bailees coverage, and computerized equipment. 16. Insuring Agreement - ANSWER Section in the policy that describes what property is covered and the perils the policy insures against. 17. Jettison - ANSWER A voluntary action to rid a ship of cargo to prevent further damage or peril. 18. Liberalization Clause - ANSWER Condition found in property insurance contracts that provides that if the insurer broadens coverage under a policy form or endorsement without requiring an additional premium, then all existing similar policies or endorsements will be construed to contain the broadened coverage 19. MCS-90 - ANSWER Endorsement attached to the truckers coverage form to provide public liability coverage. 20. Intervening Cause - ANSWER An independent action that breaks the chain of causation and sets in motion a new chain of events; when this occurs, it became the new proximate cause. 21. Legal Liability - ANSWER Commercial property coverage form that covers the insured for liability arising out of negligent damage to the property of others while it is in the insured's care, custody, or control. 22. Market Value - ANSWER The amount property could be sold for at the time of of loss. May be used to determine the amount of reimbursement for a loss. 23. Messenger - ANSWER In a crime policy, defined as an insured , partner, or employee who has care and custody of insured property outside the premises. 24. Morale Hazard - ANSWER Hazard created by an individual's tendency to contribute to a loss through his own irresponsible actions or carelessness. 25. Motor Truck Cargo Policy - ANSWER Commercial inland marine policy that protects a carrier against its liability for damage to domestic shipments in its custody. 26. Named (specified) Peril Policy - ANSWER Insurance policy that insures only against perils specifically listed in the policy.